Kenya's economy to grow at faster pace this year and next - central bank

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Kenya Central Bank Governor Patrick Njoroge addresses a news conference at the Central Bank of Kenya (CBK) headquarters in Nairobi, Kenya July 25, 2019. REUTERS//File Photo

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  • Transport, manufacturing sectors to support faster growth
  • Remittances expected to set new record high this year
  • Says FX policy unchanged despite drop in shilling's value

NAIROBI, Nov 30 (Reuters) - Kenya's economy is expected to rebound more strongly this year and next than initially thought, the head of the central bank said on Tuesday, buoyed by faster growth in sectors like transport and manufacturing.

The economy, which is East Africa's biggest, is expected to grow by 6.4% in 2021 and 6.0% next year, Patrick Njoroge told a news conference. The forecasts are higher than the 6.1% growth for this year and 5.6% in 2022, given by the bank in September.

"Recovery has accelerated," Njoroge said, cautioning that the latest forecasts have not taken into account the emergence of the new Omicron variant of the coronavirus.

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Like other economies around the world, Kenya was hit by the coronavirus-induced crisis, as restrictions imposed to fight off the pandemic reduced revenues and stifled growth.

Recovery has started this year, but the pace could be curbed by a shortage of COVID-19 vaccines and waves of infections driven by the emergence of new variants.

The projected faster growth will also be underpinned by a recovery in the key tourism sector, which was one of the hardest hit by the pandemic last year, Njoroge said.

Policymakers held the central bank's benchmark lending rate at 7.0% for the 11th straight meeting on Monday, citing a drop in the rate of inflation last month and evidence that the accommodative stance was benefiting the economy. read more

Cash sent home by Kenyans living abroad, a leading source of foreign exchange, was set for another record year, Njoroge said.

In September, the central bank projected that the cash, which is known as remittances, would rise to about $3.4 billion this year, from $3.09 billion in 2020.

The central bank has not changed its foreign exchange policy, the governor said, despite a drop in the shilling's value to its lowest ever against the dollar in recent weeks.

"We allow the market to push the exchange rate, strengthen it, weaken it as long as there is no volatility," Njoroge said.

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Reporting by George Obulutsa; Editing by Duncan Miriri and Ed Osmond

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