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NEWS & CURRENT AFFAIRS

The Nairobian

Kenya lowers growth forecast as drought cuts food output

Business

By Bloomberg | Jun 12, 2017

**Finance CS Henry Rotich photo:courtesy**

Kenya will cut its growth forecast to reflect the impact of a drought that slashed agricultural output in East Africa’s biggest economy and left the country short of its staple food, Treasury Secretary Henry Rotich said.

Economic growth will probably be 5.7 per cent this year, compared with an earlier estimate of 5.9 per cent to six per cent, Rotich said in an interview last week at his office in Nairobi. The forecast may be reduced further to 5.5 per cent once an assessment of the March-May rains is completed, he said.

GRAIN RESERVE

“We are analyzing some leading economic indicators to see if this drought has gone beyond quarter one,” Rotich, 48, said. “If that is the case, we may adjust our numbers a bit lower.”

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Kenya is experiencing its worst drought in more than three decades. The dry weather cut production of corn, reducing the country’s strategic grain reserve to less than a day’s supply, and resulted in shortages of products including sugar and milk.

The drought has been severe because it’s spanned three seasons and affected a wider region than normal, according to the National Drought Management Authority.

Beyond agriculture, the momentum in the economy is “still strong,” Rotich said, citing the building of a standard-gauge railway linking the port of Mombasa to neighboring Uganda.

That’s underpinning growth of the construction industry, he said, while tourism, one of the country’s biggest generators of foreign exchange, is also “picking up.”

Cutting its forecast will bring the Treasury’s estimates more in line with the World Bank and the International Monetary Fund, which have cut their predictions to 5.5 per cent and 5.3 per cent respectively.