Kenya Economic Overview
The Kenyan economy continues to register macroeconomic stability with low and stable interest rates and a competitive exchange rate that supports exports. Year on-year overall inflation remained within the Government target range of 5±2.5 percent in January 2021 at 5.7 percent from 5.8 percent in January 2020. The low inflation was mainly supported by a reduction in food prices and muted demand pressures.
In 2020, the Kenyan economy was adversely affected by the outbreak of Covid-19 Pandemic and the swift containment measures, which disrupted economic activities. As a result, our economy contracted by 5.5 percent in the second quarter of 2020 from a growth of 5.2 percent in the first quarter in 2020. Nonetheless, the economy has demonstrated signs of recovery in the third quarter of 2020 contracting by only 1.1 percent following the reopening of the economy. Economic growth is therefore estimated to slow down to around 0.6 percent in 2020. The economy is expected to rebound in 2021 to grow by 6.0 percent and 6.8 percent over the medium term.
Three shocks adversely affected the Kenya economy in 2020: the COVID- 19 pandemic; massive invasion of swarms of desert locusts which damaged crops; and widespread floods that led to loss of lives and livelihoods, displacement of people and destruction of infrastructure. The COVID-19 pandemic affected all sectors of the economy. However, the Kenya’s economy remained resilient and has shown signs of recovery and expected to rebound to 6.0 growth in 2021.