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Spending on mega projects to steer economy’s recovery

Kenya’s economy is this year expected to grow at between 5.7 per cent and 5.8 per cent mainly driven mainly by high spending in public infrastructure, a new report of Cytonn Investment Management indicates.

According to the report low inflation rates and investor confidence and improved security environment will also boost the growth.

Cytonn Investments Management Senior Investment Analyst Caleb Mugendi said improved weather conditions and increased budgetary allocation to the agriculture sector for ongoing irrigation projects will enhance food security — thus cushion the economy from shocks.

Direct flights

Mugendi said the tourism industry has continued to record double digit growth, having averaged 15.1 per cent in the first three quarters of last year mainly boosted by a rise in the number of  arrivals.

“We expect growth in the sector to continue, driven by the introduction of direct flights to and from the US and the continued efforts of marketing of the country’s tourist attraction sites,” he said.

He said the growth witnessed in the real estate sector is expected to be supported by improved infrastructure, as well as the increased focus on the affordable housing initiative.

Public infrastructural investments are expected to be driven by high budgetary allocations in infrastructural projects as well as allocations in energy, rail and ports construction, ICT and on sustaining water supplies will also contribute immensely.

Mugendi said the government’s initiatives such as reducing the cost of energy, aimed towards supporting the various industries, such as textile, leather and agribusiness coupled with the growth in the manufacturing sector is also expected to contribute to the overall growth of the country’s Gross Domestic Product.

“Our outlook for Kenya’s macroeconomic environment is positive, supported by expectations for strong economic growth at 5.8 per cent, a stable currency, inflation rates within the government’s target and stable interest rates in 2019,” he said.

However, the worries about Kenya’s maturing debts and the revenue collection capacity by the Kenya Revenue Authority against its budgetary targets may make a slight jolt in the short term.

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