Kenya to recover from COVID-19 economic dip next year, says World Bank

Kenya’s economy is set to return to growth in 2021 following a projected contraction this year due to the COVID-19 pandemic, the World Bank has found.

The report said that the coronavirus crisis would cause a 1-1.5% contraction in East Africa’s largest economy, pushing 2 million people into poverty and adding substantial debt to the government’s finances.

“The economy is projected to rebound relatively quickly in 2021, lifting real GDP by 6.9% year-on-year,” said the World Bank in its bi-annual review of the Kenyan economy.

However, the bank warned that Kenya’s economic growth still faces significant risks next year, including uncertainty around the length and severity of the pandemic, unpredictable weather conditions and the pace of the global economic recovery.

Kenya’s economy shrank by 0.4% in the first half of this year, compared with an expansion of 5.4% a year earlier, while the unemployment doubled to 10.4% in the second quarter according to official data.

The bank also urged the government to take advantage of debt service relief offered by richer nations to free up liquidity that would have gone into repayments.

Finance Minister Ukur Yatani told Reuters last week that the government planned to make a final decision soon on joining the G20’s Debt Service Suspension Initiative, aimed at helping poor countries weather the pandemic.

@ABNetworkOnline