Stanbic Bank projects Kenya's economy to grow at 5.9 pc

Stanbic Bank projects that the economy will this year accelerate to grow at 5.9 percent driven by export of agricultural produce which have been boosted by good rains experienced in the second half of the year.

The lender says the recovery of the economy from an estimated 5.6 percent will also be driven by the repeal of the interest capping law that is enhancing credit access by the private sector.

Stanbic Bank estimates that the economy was last year hurt by delayed long rains that dragged agricultural productivity.

This is likely to accelerate 30 basis points to 5.9 percent this year on account of good rains experienced in the second half of 2019 coupled with economic recovery of key export markets for Kenyan produce such as Pakistan and Egypt.

Stanbic Bank Regional Economist for East Africa Jibran Qureishi says improving economic fortunes in Pakistan and Egypt on the back of reforms being administered by their IMF programs, will positively impact tea shipment volumes this year, even though the lender expects prices to remain subdued. Stanbic further believes the repeal of the interest capping law will have a net positive for GDP growth this year.

Qureishi is urging the government to ensure that private sector arrears are cleared so as to ensure that any stimulus being unleashed from the repeal of the interest rate capping law is not counterbalanced by cashflow constraints due to delayed payments.

The lender expects the central bank to slash the benchmark lending rate by 50 to 100 basis points to boost private sector credit growth.