NCBA Economic Forum has projected the economy to grow up to 6% in 2024, supported by a rebound in the agriculture sector, the resilience of the services sector, and the impact of Government measures aimed at stimulating growth in the economy’s priority sectors, including agriculture and manufacturing.
NCBA notes that the unprecedented cost of living pressures negatively impacting household balance sheets will continue to push more people into economic challenges.
Speaking during the NCBA economic outlook briefing themed, 2024 Macroeconomic Outlook: Divergence Across Economies and Sectors, NCBA Bank Group Managing Director, Mr John Gachora, said despite the biting cost of the living challenge, significant progress continues to be made, noting that the Government has continued to make the necessary adjustments that will be required to restore more durable macroeconomic stability-which remains a crucial prerequisite for long-term growth.
“We have seen the government roll out significant fiscal adjustments with an outlined multi-step fiscal consolidation path anchored at a target deficit of 3% of GDP and a medium-term revenue strategy necessary to achieve long-term growth. With these “growth positive.”
Adjustments: we expect GDP to grow at 4.9% in 2023 and maintain an upward trend into 2024. Therefore, we remain pretty optimistic about 2024 prospects,” said Gachora.
Central Bank of Kenya (CBK) Deputy Governor Dr Susan Koech, who was the chief guest, said,
“Despite the global uncertainties, Kenya’s growth has remained strong and is expected to remain above the global and SSA averages in 2023 and 2024, pointing to the resilience and diversified nature of the economy. The economy grew by 4.8 per cent in 2022, well above the sub-Saharan Africa region’s average growth of 4.0 per cent and the global average of 3.5 per cent. The CBK expects the economy to grow by 5.5 per cent in 2023 and close to 6.0 per cent in 2024.”
Dr Koech further noted that the overall inflation has since declined from a peak of 9.6 per cent in October 2022 to 6.9 per cent in October 2023, which is within the CBK target range.
“The decline reflects the impact of monetary policy measures adopted by CBK, easing food prices attributed to favourable weather conditions, and the government measures to zero-rate key food imports and enhance food production through subsidy on fertilizer prices. Food inflation eased to 7.8 per cent in October 2023 from a peak of 15.8 per cent in October 2022. Fuel inflation remained at 14.8 per cent in October 2023 due to the recent increases in global oil prices and removal of unsustainable subsidies.”
She added.
The GDP in Tanzania, Uganda and Rwanda is expected to grow by 6.1%, 5.7% and 7.0% respectively.
“For Kenyan enterprises with operations in the greater EAC markets, the strong economic performance across East Africa should be good news for potential 2024 outcomes. More specifically for Kenya, though, we expect the projected growth to come with pronounced divergence across the different economic sectors. We expect the services sector to register good performance in 2024. However, broad economic strain could see some sector pockets grow below their pre-COVID levels.,”
Added Gachora.
Agricultural output is expected to expand by about 5.0%, with Agri-export flows (including coffee, tea and horticultural crops) expected to remain within their long-term-average trend performance. However, given the risk of weather volatility, this could surprise either side.
NCBA Group PLC reports profit after Tax growth of 20.3% to KES 9.3 billion
Given the sustained household budgetary strain, the manufacturing sector could remain weak at an annual growth rate of 2.6%. In comparison, the overall infrastructure spending by the government and private sector will see a low % growth rate of 4.0% in the construction sector.
NCBA noted that Kenya’s economic growth path potentially faces several challenges, including Foreign Exchange Pressure occasioned by weak shilling and low official FX reserves, Uncertain weather conditions and persistently High Inflation, Geopolitical Risks characterized by heightened financial markets risks and Global commodity price volatility, as well as Fiscal Sustainability regarding public debt service strain and further accumulation of pending bills.
“However, the government seems on course to honour its external public debt obligations in 2024. With an ongoing IMF program, Kenya is expected to benefit from improved market confidence into 2024,”
NCBA concludes.
This year’s 8th edition of the forum was attended physically and online by over 1000 NCBA corporate customers drawn from various sectors, including Manufacturing and agriculture. Key speakers included Central Bank of Kenya (CBK) Deputy Governor – Dr Susan Koech, Chairperson, Presidential Council of Economic Advisors – Dr David Ndii, CEO of Institute of Economic Affairs – Kwame Owino, Executive Director Kenya Institute of Public Policy and Research- Dr Rose Ngugi and Head of Policy Research & Advocacy, Kenya Association of Manufacturers – Job Wanjohi.
NCBA Economic Forum was launched in January 2018 to bring together the government and industry stakeholders for candid conversations to spark economic growth.
