NCBA Group projects Kenya’s economy to grow by 5.2pc in 2022
NCBA Group has projected a 5.2 per cent growth in the gross domestic product (GDP) in 2022, 0.8 per cent lower than National Treasury’s 6.0 per cent forecast, citing reduced consumption, rising costs and uncertainty.
This was revealed during the group’s virtual post-budget economic forum where economists said significant resource constraints during the year will impede the realisation of the ambitious 2022/23 budget.
National Treasury had projected that the country’s economy will stabilise at 6.0 per cent in 2022, saying the growth will cushion the Sh3.3 trillion 2022/23 budget amid aggressive tax measures.
Raphael Agung, an economist at NCBA Bank said the transition in August has complicated the budget further, not only in terms of the calendar but also desire to address policy continuity.
“Domestic risks still abound, starting from the pandemic, and the rising inflation could go higher, presenting new territories for policymakers,” he added.
Unlike the previous budgets where the government introduced extensive relief measures to address the dire food security, the 2022/23 budget somehow steered away from this despite the high cost of basic commodities that are eating up a bigger share of household budgets.
NCBA contends that the government’s decision to slash allocation for food security by about Sh15 billion to Sh46.7 billion from Sh60 billion allocated in 2021/22, and made little intervention to enhance supply or lower prices will make the cost of living more unbearable.
Cost of living
“Despite a backdrop of elevated cost of living and accelerated cost of doing business, strained public finances weighed down consumer and business expectations for any relief,” said Faith Atiti, a Senior Research Economist at NCBA.
Worse, NCBA economists said, bad weather is a threat multiplier to the agribusiness sector, which contributes 100 per cent to food and nutrition security and about 40 per cent overall workforce.
The recently revised weather outlook by the Kenya Meteorological Department indicates that the long rain seasons will be poorly distributed in the country, a move that is likely to negatively impact this year’s food security.