The pioneering investment management firm ICEA LION has presented its 1st Quarter Investor Pulse aimed at projecting Kenya’s economic outlook themed ‘Global Downturn, Local Resilience’.
Speaking during the event, ICEA LION Head of Research, Judd Murigi stated that agriculture, manufacturing, transport and information are expected to be key economic boosters for the year 2023 in the absence of factors like drought and elections that negatively impacted the growth in the previous year.
“We anticipate the Gross Domestic Product (GDP) growth in 2023 to approach or exceed 6 percent if normal or near normal rainfall resumes during the long rain seasons,” said Murigi.
He explained that drastic measures should be put in place to avert the impact of El Nino which is expected to come after La Nina (Dry) season was recently experienced.
Murigi noted that inflation is expected to go below the Central Bank Kenya (CBK’s) projected target of 7.5 percent in the course of the year while the global economic slowdown impacts the reduction in oil prices.,
“With the private sector credit growth reaching a high of 13 percent of GDP as of October 2022, the financial sector is expected to recover strongly in 2023,” added Murigi.
Even as Kenya faces immense debt servicing pressure, Murigi acknowledged that Kenya is doing better in debt servicing ratio at 10 percent compared to its counterparts, Ghana and Zambia at 30 percent and 70 percent likelihood of default respectively.
Further, Murigi posited that as long as the government maintains measures to reduce the budget deficit, the debt burden should be manageable in the near midterm.
In his remarks, ICEA LION Chief Executive Officer Asset Management Einstein Kihanda said that it is not all gloom and doom for the Kenyan economy since the second quarter of the year looks promising to both investors and the government even as tough times linger.
“The food prices are expected to depreciate as the economy thrives,” assured Kihanda.
By Juliet Njoki and Elizabeth Mugo