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IMF revises Kenya's 2023 economic growth outlook upwards to 5.3pc

International Monetary Fund headquarters building in Washington, DC. 

Photo credit: Mandel Ngan | AFP

What you need to know:

  • The IMF is also projecting moderate acceleration in the economy’s growth momentum to 5.4 per cent in 2024. 
  • The upward revision for this year's economic growth implies that Kenya is poised to generate Sh25.5 billion more in economic output in 2023 than had been earlier predicted. 

The International Monetary Fund (IMF) has revised Kenya’s economic growth projection for 2023 upwards from 5.1 per cent as forecasted in October last year to 5.3 per cent, according to the just-released World Economic Outlook. 

This means that the Fund now expects the country’s economy to grow faster than had been earlier expected, with the IMF also projecting moderate acceleration in the economy’s growth momentum to 5.4 per cent in 2024. 

The upward revision of this year's economic growth implies that Kenya is poised to generate Sh25.5 billion more in economic output in 2023 than had been earlier predicted by the IMF. 

Kenya is the only economy in East Africa whose projections for this year have been revised upwards in IMF's latest review; outlooks for Uganda, Rwanda, Burundi and the Democratic Republic of Congo (DRC) have been revised downwards. 

Burundi’s projected growth for 2023 has suffered the largest slash of 80.0 basis points to 3.3 per cent followed by Rwanda’s whose projected growth has been downgraded by 50.0 basis points to 6.2 per cent. The Fund has also downgraded the projected growth for DRC and Uganda by 40.0 basis points and 20.0 basis, respectively, to 6.3 per cent and 5.7 per cent. 

Tanzania is the only one in the region whose growth projection for 2023 remains unchanged at 5.2 per cent. 

Grim cost of living

The downward revisions in East Africa come at a time when the region is grappling with several shocks including drought and spill-overs from the war between Russia and Ukraine. 

In its latest forecast, IMF has also painted a grim picture as far as the cost of living in the region is concerned. The Fund now projects Kenya’s inflation rate to average 7.8 per cent in 2023, a revision from the softer 6.6 per cent that had been projected in October 2022. This means that IMF expects Kenya’s average inflation rate for 2023 to stand above the Central Bank of Kenya’s prescribed ceiling of 7.5 per cent. 

The largest review of projected cost of living in East Africa has been reported in Burundi where average inflation is now expected to stand at 16.0 per cent in 2023 compared to the earlier forecast of 8.5 per cent. Uganda’s projected inflation for 2023 has been revised from the October 2022 forecast of 6.4 per cent to 7.6 per cent whilst that for DRC has been revised from 9.8 per cent to 10.8 per cent.