Thursday, February 13, 2025
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CBK Maintains Prediction on Economic Growth Despite World Bank Warning

Central Bank of Kenya (CBK) Governor Kamau Thugge has insisted that Kenya’s economy will continue growing in 2024 despite the hardships experienced including floods. 

Speaking during a monetary policy committee media briefing, the CBK Governor maintained that the institution would rely on the earlier released economic forecasting indicating that Kenya’s economy will grow by 5.7%.

Additionally, he pointed out that the economy grew by 5.8% in the first quarter of the year, compared to 2023 when the economy recorded a 5.6% growth.

“Despite the recent flooding in some parts of the country, the economy is expected to remain strong in 2024 supported by the resilient services sector and robust performance of the agricultural sector,” said Thugge.

CBK Governor
CBK Governor Kamau Thugge during a past forum. PHOTO /Courtesy

Also Read: Treasury CS Explains Why Govt Went for Eurobond


CBK on Predicted Exchange Rates and Inflation

The CBK Governor also indicated that the country would enjoy a stabilized exchange rate for the rest of the year despite expected inflows from global financial institutions like the International Monetary Fund (IMF) and the World Bank. 

Additionally, he noted that the exchange rate will not be affected by the settlement of the remaining portion of the Eurobond. 

“We expect going forward a fairly stable exchange rate. We don’t see significant weakening or significant strengthening,” he said.

On the flip side, Thugge said that international interest rates will remain higher for a much longer time than anticipated adding that the government will have to consider external developments to widen the rates. 

“We have to be very cautious, that we don’t take measures here that will cause the same kind of problems we had last year, which is to widen the interest rate differentials between Kenya and advanced economies,

“Whereby we see capital flowing out. We are going to be cautious, and we will have look at developments externally, and on the basis of that we will be able to address the CBR at the appropriate time,” Thugge added.


Also Read: Climate Crisis to Cost Global Economy $38 trillion Yearly, Experts Warn


World Bank’s Prediction and Warning

In its report released on Wednesday, June 5, the World Bank warned that despite Kenya’s real GDP growth accelerating in 2023 to 5.6 percent from 4.9 percent in 2022, it was expected to slow to five percent for the rest of the year.

According to the report, Kenyan exports had significantly underperformed, noting that “the country has not diversified its products in recent years and has lost competitiveness in the markets to which it exported”.

However, World Bank country director for Kenya, Keith Hansen, welcomed Kenya’s decision to partly repay a Ksh259 billion ($2-billion) Eurobond due to mature later in July.

“It is a move that will significantly ease the immediate liquidity constraints for the year, instilling a sense of calm in the markets,” he said.

On the other hand, the government of Kenya was advised to tackle the climate-related vulnerabilities the country is facing especially for agricultural exports.

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CBK
President William Ruto and CBK Governor Dr. Kamau Thugge. PHOTO/PCS.

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Joy Kwama

Mercy Joy Kwama is a News Reporter at The Kenya Times who is dedicated to the art of storytelling and truth-telling and changing narratives. She has covered diverse topics including politics, social justice, environmental issues, climate change, and entertainment. Mercy is particularly driven to amplify the voices of African communities and challenge the prevailing status quo. She is a graduate of Riara University with a degree in Communications and Multimedia Journalism and is well-equipped to navigate the complex landscape of news reporting. In her spare time, Mercy likes to pick up new skills including crocheting, gardening, dance, reading, and music. She can be reached at joy.kwama@thekenyatimes.com

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