IMF cuts Kenya’s GDP growth forecast to 5.0% for 2024.
In its World Economic Outlook report released on October 22, the Bretton Woods Institute predicted that the country’s gross domestic product (GDP) will decline from 5.6 to 5.0 in 2024 and remain to the same level by 2025, a sign of concern for the president. . William Ruto’s government..
Gross domestic product (GDP) is a standard measure of a country’s economic health and is used as an indicator of the well-being of its citizens. A country’s GDP can fall and the economy stagnates.
A decline in Kenya’s GDP can slow down business operations and lead to job losses and lower profits in both the private and public sectors. Builders are also closing their buildings due to poor return on investment..In 2023, Kenya’s economy grew to 5.6 percent, from 4.3 percent in the previous year, due to growth in agriculture and services. Services account for 69% of growth and agriculture for 23%. Kenya’s inflation slowed sharply in the nine months from 7.7 percent last year to 4.3 percent in September 2024..
The recent resurgence has not only allowed Kenya to join the list of countries with negative change in their GDP projection for the next two years, but also anticipates slower growth in the coming years due to other economies like Ethiopia, Mali, and Democratic Republic of Congo.
Despite this, the IMF projected that several African nations, such as Nigeria, Angola, Ghana, Senegal, Tanzania, Cameroon, and Uganda, would experience substantial economic growth.
The forecast comes amid intense government-IMF lobbying for a Ksh474 billion ($3.) transfer.The suspension of 6 billion was caused by President Ruto’s decision to withdraw the Finance Bill 2024, which proposed tax measures in line with IMF recommendations.
In June of this year, Kenyan protesters rallied against the bill that aimed to introduce various products and services, prompting President Ruto to withdraw the legislation. While it impeded the anti-government demonstrations, his actions were met with condemnation from the IMF..
The US Ambassador to Kenya Meg Whitman revealed in an interview in August this year that the loan agreement scheduled for June 12 was canceled after the government violated the agreement and multinational corporations.
“The IMF was supposed to approve a payment around June 12, but when the bailout bill was rejected, they couldn’t. I think it’s important that this payment be made because of the Kenya is facing a very difficult situation, the US announced..
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