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Kenya Business Forecast Report Q4 2008Published by: Business Monitor International Published: Jul. 28, 2008 - 48 Pages Table of Contents
Abstract2008: In Recovery ModeKenya is a regional heavyweight in East Africa, benefiting from the strong macroeconomic growth ofrecent years and, until early 2008, relative political stability. The economy has a strong agriculturalbase as well as a burgeoning manufacturing sector. In recent times, tourism and foreign investmenthave driven growth forward - although violent unrest that took place over Q108 in the wakeof presidential elections has interrupted what was otherwise a robust trajectory. This quarter, weexamine the speed with which the Kenyan economy is bouncing back from the damage incurreddue to heightened political risk and disruption to economic activity. We also assess how the newcoalition government is faring amid headwinds posed by high inflation and talk of corruption.The political climate in Kenya remains uncertain, with the new coalition government still findingits feet. Chief among the issues the government will need to tackle over the coming months area potential corruption scandal involving Finance Minister Amos Kimunya, the rising cost of living,and the threat of industrial action. Careful handing of these matters will be important for shoringup investor confidence ahead of the planned US$514mn Eurobond issue. Short-term stability isrelatively assured, but the longer-term political outlook is less favourable, with poverty and inequalityof key concern. The latest quarterly data suggest that the economy is bouncing back more swiftly than initiallyanticipated, and our forecast for real GDP growth in 2008 stands at 3.8%. However, inflation hassurged of late, having hit a peak of 31.5% y-o-y in May, and this is expected to weigh on privateconsumption and dent investor confidence. The 2008/2009 budget recognises the burden that highinflation is imposing on consumers, and contains a number of measures to alleviate the pressure.Meanwhile, the Kenyan shilling is weakening on the back of heightened political risk and risingdollar demand for costly fuel imports. Our end-08 target stands at KES69.00/US$. This quarter,we examine Kenya’s potential for economic growth over 2008-2017, and assess the prospects ofthe business process outsourcing sector in particular. Kenya’s role as regional leader and its strategic location in East Africa have been complementedby business-friendly reforms to make the country a draw for international investors. The relativecalming of the political environment since the post-election unrest erupted - thanks to the formationof the coalition government - should help to undo the damage done to Kenya’s reputation as asafe and friendly place to do business. Encouraging recent developments include the introductionof broadband internet services in Mombasa from telecoms operator Safaricom. Get Full Details About This Report >> |
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