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Kenya, World Bank Diverge Further on 2019 Economic Outlook

Kenya, World Bank Diverge Further on 2019 Economic Outlook

(Bloomberg) -- The World Bank trimmed its outlook for economic growth in Kenya this year, diverging further from what the government forecasts.

East Africa’s biggest economy will probably expand 5.7 percent this year, the Washington-based lender said in an economic update Tuesday. That compares with its previous estimate of 5.8 percent and the government’s forecast of 6.3 percent, which would be the fastest rate of expansion since 2010.

Higher government spending will likely boost growth, President Uhuru Kenyatta said last week in his state-of-the-nation address. More than a million people in a dozen Kenyan counties are in urgent need of food assistance after below-average rainfall curbed farm output, the nation’s drought-management agency said in March.

“The projections assume that the grain-growing regions of Kenya will receive normal rains, albeit with some delays in 2019 before normalizing over the medium term,’’ the World Bank said. “If the March-May 2019 long rains disappoint, especially for the grain-growing regions, then this could result into further downward revision of growth for 2019 by at least 0.6 percentage point.”

Agriculture is the biggest contributor to the economy, accounting for about half of GDP. Growth is expected to be 5.9 percent in 2020 and accelerate to 6 percent in 2021, driven by a recovery in farming, and supported by private consumption, a pick-up in industrial activity and still strong performance in the services sector.

Kenya’s economy probably expanded about 5.8 percent last year, the World Bank said.

To contact the reporter on this story: Adelaide Changole in Nairobi at achangole2@bloomberg.net

To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Ana Monteiro, Helen Nyambura

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