Kenya has, once again, surpassed China after it emerged as one of the countries with a high projected Gross Domestic Product (GDP) growth rate in 2023



According to Cytonn 2023 Markets Outlook report, Kenya defeated world economies like China, Japan, Brazil and the United States.

The report projects Kenya’s GDP to record a 5.0 per cent growth rate in 2023 as the economy recovers from global-induced economic tremors.

India, with its 6.6 per cent growth projection was among the top-ranked economies while China had a 4.3 per cent projection.
The report further listed the projected growth rate of top economic blocs as follows; Sub-Saharan Africa (3.6 per cent), Middle East and North Africa economic blocs (3.5 per cent), South Africa (1.4 per cent), Japan (1.0 per cent), Brazil (0.8 per cent), United States (0.5 per cent) and European Bloc (0.0%).

The report attributes Kenyan growth to a rebound in the economic sector and reforms that have been put in place by the government.

“The expected rebound in the agricultural, transport and most of the economic sectors in 2023 is as a result of subsidy programs introduced by the government on major farm inputs and reduced drought severity which shall mitigate the soaring food prices,” the report states.

The report further attributed the projected growth to peace and political stability in the country.

“Economic sectors such as transport and accommodation shall witness continued recovery post-pandemic and this shall be enhanced with the political stability after the peaceful general elections,” the report revealed.

On financial reforms aiding economic growth, the report stated, “Gradual increase in access to credit with the credit to the private sector expected to remain strong on the back of existing policy measures, including the MSMEs Credit Guarantee Scheme, and continued economic recovery.”

According to the report, President William Ruto's announcement, on February 5, 2023, that over five million registered farmers were eligible to access subsidised fertiliser from various National Cereals Produce Board (NCPB) stores was touted among reforms expected to boost the economic factor.

The Hustler Fund is also expected to scale up the risk-based pricing model to mitigate against credit risk.

Caution

The report, however, warned Ruto’s government of risks that are posing danger to the economy and that may hinder the projected growth with debt sustainability topping the list.

“Debt sustainability is a key concern, with the public debt to GDP ratio at 62.3 per cent. A high inflation rate of 7.5 per cent is also resulting in aggressive monetary tightening which is stifling economic growth. Tightened monetary policy, currently at 8.75%, is expected to stifle economic growth,” the report warned.

Kenya will perform remarkably at a time when most countries across the world will be experiencing an economic dip as the global trade growth is set to slow down to 1.6 per cent compared to 4.0 per cent in 2022.

The dip is expected to be driven by persisting supply chain constraints and elevated inflationary pressures according to the report.