Economists expect a decline in the country’s economic growth

Nairobi, Monday July 3, 2023

KNA by Rebeccah Maria/ Daisy Masinde

The country is expected to register a decline in the Gross Domestic Product (GDP) growth due to various variables, according to the Metropol Corporation Kenya’s economic outlook 2023.

Speaking on Monday during a press briefing, Metropol Group Managing director (MD), Sam Omukoko stated that Metropol Corporation expects the GDP growth in 2023 to be 4.6 per cent.

“The slow growth is attributed to factors such as high interest rates, constrained private sector credit growth, limited capital formation in construction, energy and infrastructure sectors, weakening currencies and political uncertainties,” Omukoko said.

“We approach GDP forecasting from the gross fixed capital formation side which is the investment in fixed assets of the country taken as a collective,” he explained.

He added that for growth to happen there must be additional capacity created through accumulation of capital which is funded through savings and borrowings.

“Further increases in interest rates are expected in the third or fourth quarter of 2023, which will dampen credit growth to the private sector and slow down capital formation,” Omukoko said.

He further explained that the Kenyan shilling has been under sustained negative sentiment, losing 12 per cent against the US dollar in the first five months of the year and inflation is expected to edge back towards 9 per cent due to high energy costs, increased taxation on petroleum products and the weakening shilling.

Omukoko highlighted that they expect a gradual improvement in the economic outlook in the following years and nominal GDP growth of 5.0-5.2 per cent in 2024 and 5.3-5.5 per cent in 2025 driven by factors such as improved business and consumer confidence, infrastructure projects, affordable housing and government investments.

Metropol Group Chief Executive Officer, (CEO), Mr Gideon Kipyakwai also disclosed that the Hustlers Fund, (HF) was intended to create opportunities for people who were not able to access money from banks and commercial institutions.

“The impact of the HF is to improve the credit score by giving borrowers 50 per cent discount in six months to clear the loan and remove people from negative listing in Credit Reference Bureau (CRB),” he explained.

He also noted that serial defaulters who borrow money with the intentions of not paying back would be denied continuous access to loans.

Courtesy ; K. N. A