The Kenyan Macro economic sector faced various challenges in 2017 among them being political uncertainties, prolonged drought, the weakening shilling & a tough operating environment. However, Improved agricultural performance, a more stable political environment and added private sector growth should see 2018 being a better year for the Kenyan macro system.
This morning, Barclays Bank Kenya launched the Macro Economic report which goes in depth covering key issues affecting the economy together with issues that affected our growth as well as the expected outlook for 2018.
Speaking at the event, Jeremy Awori, the Barclays Bank Kenya MD noted that in 2017, Kenya’s economy was resilient even with slower growth despite the turmoil that was brought with it.
He also noted that with the eagerness for Kenyans to recover their businesses, growing political calm and improved weather conditions, we hope to see a change in 2018 as a country
Barclays Group’s Chief Economist Jeff Gable then went on to share the logistics and a better outlook of the report where they mainly focused on some of the factors that were pertinent in last year’s economic climate.
1. US policy uncertainty, Political strain in African countries like Angola, Mozambique, Zambia etc, European politics and the rise of Brexit, China’s ongoing adjustment & geopolitics
2. Changes in Climate
Did you know that the impact of a 1 degree Celsius increase in temperature on GDP is more dramatic for hotter climate countries & Africa will feel the adverse impact economically? Countries that depend on agriculture, like Kenya where agriculture is the backbone feel the heat the most (literally)
Super powers like the U.S, who contribute to most of the world’s greenhouse gas emissions are the least affected by this.
3. Growing Debt Burden
The last five years has seen Kenya’s debt burden increase sharply. A shocking statistic is whereby for every Ksh 3 that is paid to the Government as tax, Ksh 1 goes to debt payments.
— Kenyan Collective
(@KenCollective) January 16, 2018
This was one of the biggest challenges facing Kenya’s economy in 2017. With businesses weary of riots, losses, lack of customers who were constantly fleeing the city, this lead to many SMEs to reduce or even stop their business hours leading to loss of investments with some even losing their jobs.
In a separate press briefing Jeremy noted that 2018 looks like a year for small borrowers and lenders to thrive. This would see some of the patterns emerging in 2017 like persistent large primary deficits, high borrowing costs, Government liquidity pressure risk due to increasingly large financing needs, uncertainty over the direction of fiscal and economic policy, in part due to evolving political dynamics, slowly dwindling.
We however hope to see robust economic growth in 2018 even as Kenyans seek to regain the losses they suffered in 2017’s many uncertainties.