Kenya’s GDP to dip over Covid-19 pandemic, experts warn
Lewis Njoka @LewisNjoka
Kenya’s gross domestic product (GDP) growth for 2020 could reduce by approximately two per cent owing to the Covid-19 pandemic, experts have warned.
Investment management firm Cytonn predicts in a recent report that Kenya’s GDP will range between 4.3 and 5.2 per cent.
This is 1.3 percentage points lower than last year’s GDP growth and 1.6 points lower than the earlier prediction by both local and international analysts.
The World Bank estimated that Kenya’s GDP grew by 5.6 per cent last year, and predicted the economy would grow by 5.9 per cent in 2020, an estimate also held by economists at Stanbic Bank.
Reduce GDP
The investment firm says Coronavirus could reduce Kenya’s GDP growth to a range of 4.3 per cent to 5.2 per cent depending on the severity of the outbreak.
“Based on the impact to other economies, we believe that coronavirus may have a 10 to 25 per cent impact on GDP growth for year 2020.
The 10 per cent impact is an optimistic case in the event the outbreak is contained, and a 25 per cent impact in the event it is not contained,” read Cyton’s report in part.
Foreign investors who often purchase blue-chip stocks, have been selling their equity holdings to purchase gold and fixed income securities due to the much uncertainty in the market.
A lockdown in China, which accounts for about 21 per cent of Kenya’s total imports has seen depleted stocks to supermarkets, dealers in electronics and sellers of other imported goods.
Churchill Ogutu, an analyst at Genghis Capital concurs that the country will definitely experience reduced GDP growth in the short term, thanks to the Covid-19 pandemic.
“We for sure do expect that there will be an economic slowdown in Quarter 2 and Quarter 3 depending on how fast the containment is done.
We expect that things could go back to normal in Q3. But if the containment goes all the way to August as predicted by the US, growth for the entire year will be affected,” said Ogutu.
