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Kenya Country Risk Report Q4 2018

Kenya Country Risk Report Q4 2018

President Uhuru Kenyatta's 'Big Four Agenda' plan will likely face a number of hurdles, limiting its ability to boost economic growth. In addition to the govern-ment's weak fiscal position, implementation of each of the four objectives will likely be slowed by structural challenges.

The weakening of the Kenyan shilling will be tempered by increasing political stability and a brightening economic outlook in the coming months. Currency pressures will be broadly downward in the longer term.

The June announcement that Kenya intends to remove its multi-year lending rate cap will ensure a smoother transmission channel for monetary policy in the country. With growth still somewhat sluggish in Kenya and inflationary pressures likely to be transient, the removal of the cap will spur modest further easing.

Kenya's current account deficit will narrow modestly over the short-term. An improvement in weather will boost agricultural exports, offsetting robust import growth on the back of higher consumer confidence and higher oil prices. Strong foreign direct investment and lending inflows will also keep the overall external position sustainable.

Discussions over a referendum on possible changes to the constitution will remain high on the agenda in the coming months, given increasing demands by key opposition figure Raila Odinga. A campaign by President Uhuru Kenyatta to tackle graft will likely continue to make headlines, but this is unlikely to combat the problem on a long-term basis owing to structural headwinds.

Key Risks

The Kenyan economy remains vulnerable to volatility in external financial markets. A substantial downturn in China, which is a major financier of Kenyan infra-structure projects, could weigh on investment into the country.


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Opportunities
Economic Outlook
Economic Growth Outlook
Implementation Of Big Four Agenda Will Face Headwinds
GDP By Expenditure Outlook
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
TABLE: GDP GROWTH FORECASTS
External Trade And Investment Outlook
Higher Export Receipts Will See Deficit Narrow
Outlook On External Position
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
TABLE: TOP 5 GOODS IMPORTS 2016
TABLE: TOP 5 GOODS EXPORTS 2016
Monetary Policy
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Structural Fiscal Position
Kenya Country Risk Q4 2018ContentsCurrency Forecast
TABLE: FITCH SOLUTIONS CURRENCY FORECAST
10-Year Forecast
The Kenyan Economy To 2027
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Constitutional Amendment Demands And Corruption Will Dominate Kenyan Discourse
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Global Macro Outlook
Pressure On EM Grows, As Do Divergences
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: KENYA – MACROECONOMIC DATA & FORECASTS

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