Spared of widespread virus outbreaks, the Kenyan economy experienced a small economic contraction in 2020 as robust growth across agriculture, financial services, real estate and construction largely offset a sharp decline in hospitality, tourism, and transport services. The economy registered an impressive rebound in 2021, led by broad-based recovery in manufacturing, transport, ICT, and hospitality sectors. Despite limited direct economic linkages with Russia and Central Asia in the wake of the Russo-Ukrainian war, 2022 GDP growth faces increased headwinds in the form of soaring energy and food prices, monetary tightening, and a deteriorating fiscal position due to a mounting subsidy bill and rising debt repayment costs. Against this backdrop, how will the Kenyan economy fare in 2022 and beyond? Can business friendly reforms, infrastructure investments, and manufacturing incentives transform Kenya into a regional trade hub in East Africa over the medium-term?
This economic piece provides an overview of Kenya’s shifting demographic and economic landscape until 2027 supported by policy measures to roll out universal healthcare, create affordable housing, and drive manufacturing growth. It examines Kenya’s economic resilience to withstand growing global headwinds by charting the impact on its GDP growth trajectory and inflation trends. In particular, insights into price pressures, supply disruptions, and interest rate movements can help businesses undertake important sourcing and costing decisions.
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