Nairobi City, the heart of Kenya's economy [Photo-Courtesy]
After shrinking by 0.3 percent in 2020, Kenya’s economy grew rapidly by 7.5 percent in 2021, the fastest growth rate in 11 years.
This growth, as revealed by the Kenya National Bureau of Statistics, is, however, expected to halt at 6.7 percent this year owing to the global crisis as a result of the war in Ukraine.
In 2021, the real GDP grew by 7.5 percent, as most activities recorded positive growth, except for agriculture, forestry and fishing, which contracted by 0.2 percent.
The shrinkage in agriculture was attributed to erratic and poorly distributed long rains as well as inadequate short rains. For instance, there was a decrease in the volume of maize, coffee and tea produced.
However, the agriculture sector is expected to register growth in 2022.
In 2021, a total of 926,000 new jobs were created in the private, public, and informal sectors.
Expected stall in growth
The rapid growth is expected to halt in 2022 owing to various factors.
The International Monetary Fund (IMF) projects that growth will slow to 5.7 percent, while the Central Bank expects it to be at 5.9 percent in 2022.
The Russian-Ukraine war has affected the world economy in many ways. This is expected to have a negative impact.
The fuel crisis, which has also seen the country record its highest fuel prices ever, is also expected to hinder the economy’s growth as it has adversely affected many businesses nationwide.
The upcoming August election is also expected to send waves across the economy, due to the unpredictable nature of politics in recent Kenyan history.
Subsidies
The government is continuing to cushion its citizens with subsidies against rising economic strains. Already, the government has set aside funds to subsidize fuel prices and fertilizer prices.
Speaking during this year’s Labour Day celebrations, President Uhuru Kenyatta stated that due to government intervention, Kenya currently has the lowest fuel prices in the region.
Adverse economic effects are already being felt across the country, with high prices of commodities pushing the cost of living above the roof. An ordinary citizen may be perplexed by KNBS statistics indicating a rapid economic growth of up to 7.5 percent in 2020, despite the high cost of living witnessed since the COVID-19 era.
