M a r k e t N e w s

Tourism and Agriculture to Drive Growth - World Bank

Posted on : Monday, 19th January 2015

A recovery in tourism and agriculture sectors coupled with increased public expenditure is expected to boost economic growth this year after a slowdown last year, the World Bank said in a global report released yesterday. In its Global Economic Prospects 2015, the lender that finances capital projects in developing countries has forecast the national wealth to expand by six per cent this year up from an estimated growth of 5.4 per cent last year.

The growth is further projected to accelerate to 6.6 per cent next year, before flattening at 6.5 per cent in 2017.
If this is attained, Kenya's growth will be above the average for sub Saharan Africa excluding South Africa, projected to slow down from an estimated 5.6 per cent last year to 5.4 per cent this year, before rising to 5.7 and 5.9 per cent in subsequent two years.
"Among frontier market countries, growth is expected to increase in Kenya, boosted by higher public investment and the recovery of agriculture and tourism," the bank said in its outlook.Growth in wealth created from key sectors of agriculture and tourism was hardest hit last year, thanks to poor rain patterns and wracking terrorist-related insecurity incidences, respectively.
The official growth data will be released later in May in through the government's annual Economic Surve.
The National Treasury last September downgraded its 2014 economic growth projection to between 5.3 and 5.6 per cent, down from an earlier forecast of 5.8 per cent.
"We had assumed that challenges of insecurity would be resolved faster but they translated into travel advisories," Cabinet Secretary Henry Rotich said on September 30. "The rain patterns were also erratic."Tourism bore the biggest brunt from last year's persistent insecurity, with arrivals through airports suffering a 13.6 per cent slump to 428,223 in the six months to June 2014 compared to 495,660 over a similar period last year.Since the new interior Cabinet secretary Joseph Nkaissery assumed office on December 24, security perception has been improving with no major terrorist incident so far, boosting investor sentiment.
The government, on the other hand, has mobilised $2.75 billion (Sh250.25 billion) from international investors for infrastructural development in transport and energy sectors, in addition to Sh89.1 billion tapped domestically last year.
"The ongoing infrastructural projects will help spur growth with standard gauge railway alone is expected to contribute 1.5 per cent to the GDP," Rotich said on November 21.
The World Bank however warned that increasing pressure on wage bill could lead to a further deterioration in the country's fiscal position.A nationwide teachers' strike since January 5 calling for a better pay has paralyzed learning in primary and secondary schools while there have been pockets of industrial actions by health workers in a few counties.
"...fiscal position deteriorated in many countries," the bank said. “In some, it was due to increases in the wage bill (for example, Kenya and Mozambique).”

Source : http://allafrica.com/stories/201501140365.html
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