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Kenya’s economic resilience and Policy Directions in 2023

Kenya’s economic landscape in 2023 showcased remarkable resilience and growth, with the real Gross Domestic Product (GDP) expanding by 5.6%, up from a revised growth rate of 4.9% in 2022. This positive trajectory was evident across various sectors, with agriculture, forestry, and fishing experiencing a significant recovery, growing by 6.5% after a 1.5% contraction the previous year.

This rebound was primarily due to favorable weather conditions. Additionally, sectors such as information and communication (9.3%), transportation and storage (6.2%), financial and insurance (10.1%), real estate (7.3%), and accommodation and food services (33.6%) significantly contributed to this growth. However, the mining and quarrying sector faced a 6.5% contraction due to reduced production of key minerals like titanium and soda ash.

In terms of GDP composition, agriculture remained dominant, contributing 21.8% to the total GDP. The services sector collectively contributed 61.3%, while industry-related activities accounted for 16.9%. Nominal GDP also saw a notable rise, increasing by 12.0% to KES 15,108.8 billion in 2023, up from KES 13,489.6 billion in 2022. Looking ahead, Kenya’s economy is projected to maintain its resilience in 2024, bolstered by a robust services sector, strong agricultural performance due to expected adequate rainfall, and a decline in global commodity prices.

Kenya’s public debt dynamics saw a shift, with total nominal public and publicly guaranteed debt standing at KES 11.1 trillion as of December 31, 2023. This figure was reduced to KES 10.4 trillion by March 2024, largely due to exchange rate fluctuations. Debt structure adjustments were noted, with domestic and external debts being equally balanced at 50%.

Inflation remained steady at 7.7% in 2023, driven by increases in transport (12.2%), food and non-alcoholic beverages (9.7%), and housing, water, electricity, gas, and other fuels (8.1%). The Central Bank Rate (CBR) was raised to 12.50% by December 2023, leading to higher interest rates across various financial instruments.

The Kenyan Shilling experienced depreciation against major international currencies in 2023, but it appreciated against some regional and minor global currencies. Renewed confidence in financial markets, driven by the successful refinancing of the Eurobond and the oversubscription of Infrastructure Bonds, contributed to the shilling’s strength in early 2024.

PKF’s recommendations underscore the need for the swift implementation of the National Tax Policy to enhance predictability and transparency, along with the adoption of technology to streamline tax collection processes. These measures are expected to bolster investor confidence and support sustainable economic growth.


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