April 28, 2020 / 10:32 AM / a month ago

UPDATE 1-Kenya estimates 2020 GDP growth of 2.5% but could go lower

(Adds details, quotes, background)

By George Obulutsa

NAIROBI, April 28 (Reuters) - Kenya’s economic growth could decline to 2.5% in 2020, but may go lower to 1.8%, compared with 5.4% growth a year earlier, Finance Minister Ukur Yatani said on Tuesday, as key sectors of the economy suffer the effects of the coronavirus outbreak.

Kenya has confirmed 363 cases of COVID-19, the disease caused by the coronavirus, and 14 deaths as of April 27, and it has imposed restrictive measures to halt its spread.

The country has suspended international passenger travel, imposed a daily dusk-to-dawn curfew and banned public gatherings. It has also barred movement into and out of Kenya’s five regions most affected by the virus, including the capital, Nairobi.

Those moves have led to a serious reduction in economic activity, the finance minister said.

“The COVID-19 is a serious global problem. For us, we are estimating about 2.5%, but can go lower than that, to 1.8% growth if the situation persists,” Yatani said.

“It is affecting every segment, every sector of the economy ... there are loss of jobs, loss of earnings, and there is general slackness of growth at all levels. This might actually persist for a long time.”

Yatani also said that Kenya expects to unlock 75 billion Kenyan shillings ($701.26 million) from an International Monetary Fund standby facility by mid-May to help the economy withstand the effects of the coronavirus.

“We hope that it is going to be released to us by mid next month,” he told reporters.

In early April, the government had forecast the economy would grow by 3% or less this year from an earlier forecast of 6.1% because of the effects of the novel coronavirus.

Tourism and horticulture, leading sources of foreign exchange and major employers, have been hit hard. The coronavirus outbreak has also disrupted supply chains and local production.

The government has cut taxes for companies and individuals to cushion the economy.

Earlier on Tuesday, Yatani said that Kenya’s economy grew by 5.4% in 2019, down from 6.3% the previous year, partly due to a slowdown in agriculture, manufacturing and construction.

The finance minister said that he hoped agriculture could be cushioned from the effects of the outbreak by good weather this year.

“But all other sectors are seriously affected, particularly tourism, general services, industry, transport. They are affected at all levels,” he said. ($1 = 106.9500 Kenyan shillings) (Reporting by George Obulutsa; writing by Omar Mohammed; editing by Larry King)

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