Kenya is set to lose its position as the third largest economy in Sub Saharan Africa to Ethiopia and Angola.
This is according to the International Monetary Fund (IMF). According to the IMF, Kenya will slip to fifth position with Angola taking third position and Ethiopia taking fourth position.
Already, Angola has pushed Kenya to fourth position with Ethiopia expected to push Kenya to fifth this 2023 year.
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According to the IMF, Ethiopia and Angola economies will expand at a rate of 13.5 and 8.6 per cent respecting. In contrast, Kenya’s economy will grow at the slower rate of just 2.4 per cent.
The IMF further projects that Kenya’s Gross Domestic Product (GDP) will hit $117.6 billion this year, behind Nigeria ($574 billion), South Africa ($422 billion), Angola ($135 billion) and Ethiopia ($126.2 billion).
The projection by the IMF that Kenya will slip to fifth position has however been disputed by Mark Bohlund, a Senior Credit Research Analyst at REDD Intelligence.
In a correspondence with a local daily, Mark said that the projections are wrong because they are based on erroneous forex projections.
“Yes, the IMF forecasts are showing that both Angola and Ethiopia are going to be larger than Kenya in 2023 in nominal USD terms. However, these projects are likely to be incorrect as they are based on unrealistic FX estimates and forecasts for both Angola and Ethiopia,” he told the daily.
He claimed that the Angolan 2023 nominal GDP projection is based on a forecast of Angolan Kwanza (AOA)452/USD. However, this is where the currency traded in October when the World Economic Outlook forecasts were released.
“It is now trading at AOA504/USD which leaves the Angolan economy just slightly larger than Kenyan in 2023, ceteris paribus,” he said.
“The Ethiopian forecast is based on an assumption of ETH 65/USD, which is weaker than the official exchange rate but far stronger than the black-market rate which I believe currently is around ETH95-100/USD.”