The World Bank has cut its forecast for Kenya’s economic growth in 2024 to 4.7% from 5.0% due to the impact of severe floods, reduced public spending, and subdued business confidence.
Kenya’s gross domestic product (GDP) grew by 5% during the first quarter and by 4.6% in the second quarter of 2024, slower than 5.6% for the full year of 2023.
While the country has managed to improve its low inflation and stabilize it foreign exchange rate, it continues to face a high risk of debt distress,
“Debt vulnerabilities including elevated debt serving costs, accumulated pending bills, and missing revenue targets remain key challenges,” said the World Bank in the new Kenya Economic Update report.
The bank further noted that the “failure to meet fiscal targets would exacerbate Kenya’s debt vulnerabilities and threaten macroeconomic stability.”
While a component of the development, Qimiao Fan, World Bank Country Director for Kenya, said, “A slowdown in economic growth would negatively affect job and poverty reduction.”
Fan expressed the World Bank’s commitment to support the Kenyan Government in improving the country’s economic environment and creating more jobs. According to Fan, Kenya’s economic environment can be improved by addressing corruption, improving the business environment, and tackling fiscal vulnerabilities.
This development comes as Kenya’s year-on-year inflation has declined over the past few months. In November, the inflation was 2.8%, according to data released by the Kenya National Bureau of Statistics (KNBS).
Related: Kenya’s inflation rise slightly to 2.8% in November
