Kenya’s economy is projected to experience its worst performance since the COVID-19 contraction of 2020, Bloomberg reports, citing a new World Bank report.
The Washington-based lender has lowered its growth forecast for 2024 to 4.7%, down from the 5% prediction made in June.
The downward revision is attributed to a confluence of factors, including devastating floods and mudslides in April that claimed over 300 lives, widespread anti-government protests resulting in further casualties, and the government’s fiscal consolidation efforts through reduced spending.
The World Bank also anticipates a slightly weaker growth rate of 5% in 2025, a reduction from the previously estimated 5.3%. The report highlights several key risks to this outlook, including further fiscal slippage, the increasing frequency and intensity of extreme weather events, and ongoing global economic challenges.
The report emphasizes the need for Kenya to address structural issues hindering sustainable and inclusive growth. These include concerns about fiscal sustainability, governance weaknesses, declining exports, slow productivity growth, and the escalating impact of climate shocks.
The World Bank also highlighted the country’s persistent high risk of debt distress. Domestic debt, now Kenya’s largest liability, remains a significant concern due to its high cost and short maturity periods.
