Kenya is one of the bright spots inSub-Saharan Africa. With economic growth rates sustained atabove 5 percent, Kenya has outperformed the regionalaverage, for 8 consecutive years. Robust domestic demandemanating from private consumption and government investmentare the key drivers of growth, underpinned by a stablemacroeconomic environment, lower oil prices,diversification, improved security perceptions, and ongoingstructural reforms. Medium term economic prospects for Kenyaremain robust. Ongoing public infrastructure investmentswill continue to play a ‘crowding-in’ role, easing transportand energy costs, and supporting economic expansion inconstruction andindustry. Private consumption will driveservice sector growth, while agricultural sector will remainlargely dependent on favorable weather conditions and timelyavailability of inputs. Though oil prices are expected topick-up over the forecast horizon, Kenya’s external sectoraccount will remain healthy on account of a steady increasein remittances, a rebound in tourism and a rise in foreigndirect Investment (FDI). Nonetheless, there exist downsiderisks that can dent future growth prospects. Risks toKenya’s future growth prospects that are not included in ourbaseline outlook emanate from both external and domesticsources. On the external front, these include weaker thanexpected growth in the global economy, volatility in globalfinancial markets and a spike in oil prices. On the domesticfront, these include delays to fiscal consolidation, adverseweather developments, and potential uncertainties associatedwith the run-up to 2017 elections that could lead to await-and-see attitude by investors, thereby dampeningshort-term growth prospects.
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