UPDATE 2-Rebound in key sectors seen driving Kenya economy in 2013

Thu May 23, 2013 10:21am EDT

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* Officials keen to attract new investments

* Stable economic fundamentals to support (Adds comments from cabinet secretary, permanent secretary)

By Duncan Miriri

NAIROBI, May 23 (Reuters) - Kenya's economy is expected to expand by about 6 percent in 2013 thanks to a rebound in sectors such as manufacturing and financial services, officials said on Thursday.

The country's $35 billion economy expanded by 4.6 percent last year, only a touch more than in the previous year, as activity was slowed by high costs and political uncertainty.

Optimism about the prospects for east Africa's biggest economy has risen since the country held a peaceful presidential poll in March, in contrast with the violence-riddled poll of five years ago when more than 1,200 people died.

Anne Waiguru, cabinet secretary for the ministry of devolution and planning, said the country would focus on implementing the economic plan of President Uhuru Kenyatta's Jubilee coalition, which took power pledging to foster private sector-led growth and lift millions out of poverty.

"If the finance and banking sector continues to grow, now that there is no uncertainty with the elections, we would expect that would contribute to the (overall) growth," Waiguru told Reuters after presenting the annual economic survey.

"We expect growth in tourism, agriculture as well. Manufacturing should improve a little bit more this year."

Waiguru attributed this year's improved growth outlook to a stable macroeconomic environment and increased investor confidence after the broadly peaceful elections.

The Kenyan shilling has been largely stable against the dollar this year, gaining about 2 percent, while inflation is well within the government's preferred range.

Edward Sambili, permanent secretary in the ministry said the main risks to this year's growth forecast were a deterioration in the global economy and drought, which could hit the farming sector that makes up a quarter of the economy.

"Agriculture still remains a very huge sector. If the good weather is not sustained we are affected," Sambili said.

Kenya is testing commercial viability of promising oil deposits it struck last year, while Kenyatta has created a new ministry of mining despite whittling down his cabinet, highlighting the importance attached to the sector.

"The government will focus on pushing investments in some of the very key strategic areas," Sambili added, citing foreign direct investment into the natural resources sector.

Kenya could attain the double-digit growth that the government has been targeting if it properly manages wealth from those natural resources, the IMF said last week. (Editing by Drazen Jorgic)

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