Embed Size (px)
Citation preview
Still Standing –Kenya’s slow recovery from a quadruple shock
with a special focus on the food crisis
World Bank Economic Team
Presentation by Dr. Wolfgang Fengler
Press Briefing
Intercontinental HotelNairobi, December 17, 2009
Main Messages
After experiencing a quadruple shock*, Kenya is still standing, and
recovering slowly.
Kenya‟s economy in 2009 is expected to grow at 2.5%.
Growth in 2009 has been driven by services and construction.
Agriculture will contract again this year (-2.4 %).
Kenya is experiencing a revolution in IT, with internet (+28%) and
telephone (+35%) connections increasing rapidly since mid 2008.
The price of Kenyan maize in 2009 was double the international price,
and higher than in Uganda or Tanzania.
Kenya‟s high maize price policy distributes resources from the poor to the rich.
Half of all maize revenues are captured by less than 2% of the maize farmers.
For 2010, the World Bank projects Kenya‟s growth will be at 3.5%.
Kenya’s Economy in 2009
After experiencing multiple shocks, Kenya‟s
growth has been weak since 2008
Kenya: Quarterly growth 2008 and 2009
2009 growth has been driven by
services – agriculture will contract again
Construction, tourism, transport, and communication
have been the drivers of 2009 growth
Kenya is experiencing an IT revolution Since 2008, IT and phone connections increased rapidly
Weathering the Storm –Kenya one year after the global financial crisis
TRANSMISSION
MECHANISM
Status 2009 Outlook 2010
Banks and
Stock
Exchange
• No contagion. NPLs lower than
in 2006
• Sharp decline in NSE
• Increased lending to the real
sector as the economy recovers
Trade • Current account deficit at 6.7
percent
• Recovery in exports; but
continued high imports due to
higher oil price
Financial
flows
(remittances,
FDI, other
flows)
• Capital account held up strongly
due to increase in “other flows”
• Remittances expected to
recover in line with global trends;
• FDI remain subdued until the
global economy recovers;
dependent on IPOs
Kenya has been weathering the global
financial crisis well
Kenya‟s current account deficit is widening (6.7% of GDP);
strong capital inflows keep the external sector in balance
The Balance of Payments turned negative
at the end of 2008 and recovered in 2009
Overall
Forex Reserve
Import month cover
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
-1000
-500
0
500
1000
1500
2000
2500
3000
3500
4000
Jan.
Feb.
Marc
h
April
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Marc
h
April
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Marc
h
April
May
June
July
Aug.
2007 2008 2009
Month
s o
f im
port
cover
US
$ m
illio
n
Kenya entered the crisis with a strong
fiscal position
… but weaknesses in budget execution (only 65%)
make it difficult to implement fiscal stimulus
The Outlook for 2010
2010: A continuation of Kenya‟s
(slow) recovery with 3.5% growth
Kenya‟s growth will be similar
to the SSA average
-2
-1
0
1
2
3
4
5
6
2008 2009 2010
Perc
ent
GDP_Ken GDP_SSA Percapita_Kenya Percapita_SSA
… but remains below its neighbors
-4
-2
0
2
4
6
8G
DP
at
Ma
rke
t p
ric
es
(2
00
5 U
SD
)
2009 2010
Special Focus: Food Crisis
The impact of the food crises varies by
type of crisis and the target groups
Urban poor Rural poor
Primary Cause All Net sellers Net buyers
2008
Food
Price
Spike
Rising
international
prices
Negative Positive Negative
2009
Food
Crisis
Drought Negative Mixed, negative in
drought areas
Negative
Kenya‟s maize prices increased while
global prices declined
Kenya
Global
0
50
100
150
200
250
300
350
400
450
Jan.
Feb.
Marc
h
April
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Marc
h
April
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Marc
h
April
May
June
July
Aug.
Sept.
Oct.
Nov.
2007 2008 2009
US
$/M
T
Political crisis
DroughtImport duty suspended
… and remained above the prices of
Tanzania and Uganda in 2009
Less than 2% of maize sellers control 50%
of the market
Net Maize sellersNet maize
consumers
Farms accounting for
50% of maize sales
Rest of maize
sellers
Number of households (%) 1.7 36.7 61.6
Gross revenue, maize sales (US$,
mean)
3,474 162 0
Total household income (US$, mean) 8,849 2,357 1,565
Land holding size (ha, mean) 11.09 2.77 1.56
Thank You
The full report will be posted on the World Bank Kenya website: www.worldbank.org/Ke
It will also be available on http://blogs.worldbank.org/africacan/, a blog by the World Bank‟s
Chief Economist for Africa, Shantayanan Devarajan
For more information on the World Bank „s Economic Program, you may also contact Jane
Kiringai ([email protected]) or Wolfgang Fengler ([email protected])
