Kenya’s economic growth rate slowed down in 2022 due to various challenges, but the country’s economy is anticipated to have a “resilient” performance in 2023, despite facing high inflation and interest rates.
According to the Kenya National Bureau of Statistics’ 2023 economic review, the Gross Domestic Product (GDP) grew by 4.8%, compared to 7.6% the previous year.
The report also states that the significant agriculture sector, representing more than a fifth of GDP, declined by 1.6% last year, majorly due to the worst drought experienced in the Horn of Africa in four decades, affecting maize and tea production.
Even though tourism improved slightly in 2022 with visitor arrivals increasing to 1.54 million, it still remained below pre-Covid-19 levels. Nonetheless, the report is optimistic that Kenya’s economy will remain robust in 2023 due to a strong performance in the services sector and the expected recovery in agriculture.
However, the growth will be subdued by high inflation and sustained high-interest rates as domestic demand declines.
The weaker Kenyan shilling, which has been trading at record lows against the US dollar, may worsen the situation by making imports more expensive and slowing down international trade.
The country is further grappling with a massive debt amounting to approximately nine trillion shillings, equivalent to around $70 billion this year, according to figures from the central bank.
Kenya’s cost-of-living crisis, mostly contributed by increasing food and fuel prices, has led to opposition protests against President William Ruto’s administration, which the opposition accuses of failing to lower the prices of essential commodities.
While the country faces several economic hurdles, there is hope that the government will take appropriate measures to stabilize the economy and make it more resilient in the long run.