NAIROBI, Oct. 23, 2009 (Xinhua News Agency) -- Kenya's economy is well on the recovery path following the global economic recession which affected most of the key sectors, according to local economists.
The East African region's biggest economy is forecast to grow between 1.5 percent and 2.5 percent in 2009, after being dampened by the unpredictable rains, continued political bickering and delayed easing of the global financial crisis.
Economist Robert Bunyi said the economy was recovering from the post-election economic fallout, drop in confidence, poor rainfall and a weak global economy.
"I expect that agriculture will rebound strongly next year underpinning a wider rebound in the general economy," Bunyi, the managing director of Mavuno Capital, told Xinhua in a recent interview in the capital Nairobi.
"The global economy will however remain weak for a number of years. It seems to me the local environment will be dictated by the unfolding political debate and that is the most important risk for the economy," he said.
The Kenya National Bureau of Statistics estimates that the economy grew by 2.1 percent in the second quarter of 2009, despite the adverse impact of drought, power rationing and high inflation.
Experts concur (NASDAQ:CNQR) that the local economy is resilient having withstood the shocks of post-election violence, drought and global recession.
According to global fund management company, AIG (NYSE:AIG) , Kenya's economy will rise 1.5 percent to 2.0 percent this year, and increase to 4.0 percent in 2010 on account of stimulus spending by the government.
The fund manager says enhanced credit extension by banks, a recovery of the agricultural sector and easing of the inflation will fuel the country's economic growth.
Senior Investment Manager Edward Gitahi says the positive growth for 2009 further reflects the resilience of the economy that has weather the severe shocks of the post-election crisis, adverse weather and the effects of the global financial meltdown that happened in the latter part of 2008.
"The economy is on the economic recovery and this will expand to 4.0 by 2010 and recovery fully by 2011. By then we expect agricultural and manufacturing sectors to play key roles in the economy," Gitahi told Xinhua in Nairobi.
"Inflation is still heavily influenced by food prices which represent about 50 percent of inflation basket. Going into next year, we expect to see some signs of improvement," Gitahi says.
Hopes of accelerating the country's economic growth looked doomed after violence following the 2007 polls threatened to wipe out the economic gains.
Gitahi says the risk to economic growth is uncertainty created by the high voltage political environment that could potentially derail a sustained economic recovery.
Kenya's economic recovery after political disturbances in early 2008 has been cut short by a range of factors, including the impact of rising international prices for food, fuel and fertilizer.
Further economic strain was exerted by falling global demand that has translated into weaker export growth and lower tourism receipts,remittances, and private capital flows.
The country's mainly rain-fed agriculture sector makes up over a quarter of the GDP and its produce is the main export commodity.
Judging from the anticipation of the rains, there will probably be a better harvest this year, as compared with a similar period of last year, Kwame Owino, program officer at the Institute of Economic Affairs, told Xinhua.
Owino noted that highest sector performance was registered by hotels and restaurants at 24.2 percent and this suggests the recovery of tourism.
"Kenya is heading towards the peak tourism season and that too will tell us whether to expect uplift in GDP growth from improved numbers of tourists," Owino said.
He cautioned that the economic crisis is not fully over in Kenya's traditional tourist markets in Europe and North America and this could affect both visitor numbers and the length of stay.
