|
GDP Growth – Our outlook for 2022 is Neutral on GDP Growth. We are projecting the economy to register a growth of within the range of 4.3% - 4.7% in 2022 supported by continued recovery of businesses from the adverse effects of the pandemic; this is on average 1.4% lower than the estimated 2021 growth of 5.9%. The key downside to this growth shall be the erratic weather affecting agricultural produce and the August 2022 general elections which risk destabilizing the Macro Economic environment,
Inflation - Our outlook for 2022 is Neutral on Inflation. We expect the inflation rate to remain within the government’s target of 2.5%-7.5% in 2022 and come in at an average 6.3%. The rising global crude oil prices, however, will continue putting pressure on the inflation rate,
Currency - Our outlook for 2022 is Neutral on Currency. We project the Kenya Shilling to trade within the range of between Kshs 112.0 and Kshs 117.0 against the USD in 2022, driven by the increased global crude oil prices that will lead to increased dollar demand from oil and energy importers who will have to increase the amounts they pay for oil imports and hence depleting dollar supply in the market,
Interest Rates – Our outlook for 2022 is Neutral on Interest Rates. In the short term, the Monetary Policy Committee (MPC) is projected to maintain the accommodative policy stance taken in 2020 to support the economy from the adverse effects of the pandemic. The MPC has maintained the CBR at 7.00% since April 2020 following a cumulative 125 bps cut, from 8.25% in January 2020. However, we expect some upward pressure on the interest rates as investors demand for a premium for the increased risk and uncertainty posed by the elections;
Government borrowing – Our outlook for 2022 is Negative on Government Borrowing. We expect the government to borrow aggressively from both the domestic and foreign markets as it aims to plug in the fiscal deficit, which is projected to come in at Kshs 1.4 tn in the FY’2021/22 equivalent to 11.4% of GDP. On revenue collection, we expect continued improvement in 2022 due to the relatively more conducive business environment,
Investor Sentiment – Our outlook for 2022 is Negative on Investor Sentiment. We expect 2022 to register lower investor sentiments mainly due to investors taking a wait and see approach as they monitor the election proceedings, expected increase in Eurobond yields as concerns over Kenya’s high debt-to-GDP ratio persist, and, expected depreciation of the Kenyan currency as a result of increased oil prices globally and high debt servicing costs,
Security – Our outlook for 2022 is Neutral on Security. We expect security to be maintained in 2022, although the main concern is the political environment which we expect to heat up gradually as we edge closer to the August 2022 General Elections;
|
