World Bank: Kenya’s economic performance is expected to be robust at 4.9% per year in 2022-23

The Kenyan economy has displayed remarkable resilience in the face of the COVID-19 shock, with output in 2021 surpassing pre-pandemic levels. The latest Kenya Economic Update report, released by the World Bank, sheds light on the positive trajectory of the country's economic recovery. Economist Reuben Wambui joined CNBC Africa to discuss the key highlights of the report and provide insights into the driving forces behind Kenya's economic resurgence. Wambui emphasized the significant growth experienced in the first half of 2021, with a 5.3 percent increase, indicating a promising path towards recovery. The report underscores the pivotal role of sectors like services and education in propelling this economic upturn, while also highlighting challenges faced by industries such as agriculture, which have been hampered by factors like adverse weather conditions and drought. Despite the progress, poverty remains a persistent concern with uneven distribution across society. However, fiscal measures implemented during the pandemic have contributed to poverty reduction, albeit at a gradual pace. On the revenue front, public revenues have shown an impressive rebound, with a notable focus on tax administration and investment flows. While concerns regarding fiscal buffers persist, efforts are underway to enhance revenue generation through initiatives such as the task force on energy pricing. Vaccination programs and the upcoming elections in August 2022 pose additional risks to economic growth, necessitating strategic policies to mitigate potential challenges. The banking sector has emerged as a pillar of resilience, particularly in investment returns, although lending activities may face constraints due to economic uncertainties. The Central Bank's accommodative stance on lending rates has supported the economy's recovery, aligning with global trends of addressing inflation concerns amidst the pandemic. The recent rebasing of the GDP has provided a clearer picture of Kenya's economic landscape, enhancing market focus and competitiveness within the African region. Looking ahead, Wambui outlined three key risks for Kenya's economy: the need for robust job creation policies, the ongoing impact of COVID-19 variants, and the potential political disruptions surrounding the upcoming elections. Navigating these challenges will be vital in sustaining and further bolstering Kenya's economic performance in the coming years.