2012-09-05 09:45:09 - Kenya Business Forecast Report Q2 2012 - a new country guide report on companiesandmarkets.com

Although the Kenyan economy faces a great deal of uncertainty in 2012, we forecast real GDP growth will register 5.0%, up from an estimated 4.1% in 2011. Improving domestic economic conditions and the robust economic outlooks among regional trade partners underpin this expectation.

Our call for improving domestic economic conditions is based on our belief that, thanks to tight monetary policy, inflation will head lower over the course of 2012 and the Kenyan shilling will not experience weakness as it did in 2011. One downside of tight monetary policy is that the cost of borrowing will be high for both the private and public sectors, especially in the first half of the year.

While the High Courts ruling that elections will take

 

 

place in March 2013, rather than August 2012, provides clarity on the timing of the vote, we note that there is still a great deal of uncertainty surrounding the election. It is unclear whether two prominent politicians will be eligible to run because of ongoing proceedings at the International Criminal Court in The Hague. There is also likely to be a great deal of horse-trading, with alliances likely to be made and broken in the run-up to the election.

Major Forecast Changes

No major forecast changes.

Key Risks To Outlook

The weather poses risks to our views on growth, inflation, the currency and the balance of payments position. Another season of inadequate rain would undoubtedly have negative ramifications for all of these.

Another major risk stems from elections. Although by no means our core scenario, we cannot rule out the possibility of a repeat of the unrest which followed the last poll in 2007.

Our core scenario for Kenyan growth assumes a mild recession in Europe. If the situation ends up being far worse (eg, a breakup of the eurozone), Kenya would be negatively affected through its trade and financial links – not only to Europe but also to the rest of the world.The price of this business forecast report covers 4 quarterly reports on this country. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

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