Deloitte has predicted that Kenya’s GDP growth will fall to 5.7% in 2022 as a result of a more generalized global economic slowdown, more uncertainty related to the August elections and tighter fiscal policies.
Compared to the nation’s 7.5% GDP growth in 2021, which was 1.2% higher than the audit firm’s prediction, this is a decrease of 1.2 percentage points. Deloitte also predicted that Kenya’s debt to GDP ratio would reach 72.0% in 2022 as a result of the decline in government revenue in its East Africa Macro-economic Publication Volume III.
Tuesday saw an all-time low for the shilling against the dollar, a symptom of inflation and rising import prices. According to data from the Central Bank of Kenya (CBK), on Tuesday, the Kenya shilling to the dollar exchanged at an average rate of Ksh120.45.
Read: Heavy Gov’t Borrowing Continues To Depreciate Kenyan Shilling
In 2022, the country’s account deficit is predicted to reach 5.8% due to increased debt servicing costs and fiscal pressures associated with the August election. According to official figures, Kenya’s current account deficit increased marginally to 5.4% of GDP in 2021.
On the plus side, growing investment by private equity firms, multilateral institutions, and bilateral investment agencies is expected to boost Foreign Direct Investment (FDI) inflows by 81.4% in 2022, reaching USD 1.3 billion (Ksh156.6 billion). From USD 716.8 million (Ksh86.3 billion) in 2020 to USD 448.1 million (Ksh54 billion) in 2021, FDI inflows to Kenya decreased by 60.0%.
Due to rising global commodity prices along with supply chain shocks, East Africa’s GDP growth prospects are predicted to decline to 5.3% in 2022 from 6.4% in 2021.
Deloitte is a professional service provider dealing with providing audit and assurance, consulting, financial advisory, risk advisory, tax and related services.
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