A glance on Kenyan economy

The Kenyan Economic Survey 2009 confirmed that country's economy stalled in 2008 growing by a dismal 1.7% compared to a robust growth of 7.1% in 2007.This was occasioned by the post-election violence, inadequate rainfall in most part of the country, high inflationary environment after rapid rise in fuel and food prices and the external shocks associated with the global melt-down.

The construction sector was the best performer growing by 8.3% buoyed by increased infrastructural spending.The manufacturing sector posted a growth rate of 3.8% despite many challenges.Agriculture which accounted for 23 % of GDP declined by 5.1%.During Q1 2009,the economy grew by 3.9% compared to a decline of 0.6% over a similar period last year due to the negative impact of the 2007 post election crisis.

A key objective of the budget is to re-ignite economic growth through increased fiscal expenditure targeting employment generation,poverty reduction and enhancing food security.The total expenditure is projected at $11.4 billion with development expenditure budgeted at $3.5 billion (29.9% of total expenditure) while recurrent expenditure is estimated $ 7.9 billion.

High inflation remains a major threat to the economy.For the H1 2009,overall inflation averaged 23 supported by rising price of food,housing and medical services.Although the overall month-to-month inflation is forecast to remain high in 2009 as dry weather keep food prices high.The situation is worsened by power rationing.

During 2Q 2009, the Kenya shilling strengthened by 4.9% against the US Dollar while losing 11.6% against the Sterling Pound and 2.1% against the Euro.The relative strength against the USD was attributed to commercial banks unwinding their positions and the general weakness of US Dollar in the international markets.

The outlook of the is cautiously optimistic given the challenges of inadequate rains and possible increase in energy costs.