Macro Forum: The Street View



Economic growth remains robust with a slightly lower GDP figure of 6.0% in Q3 2018 compared to 6.2% in the previous quarter and 4.7% in Q3 of 2017. Key drivers of growth were the retail and wholesale subsector and agriculture, which expanded 6.8% and 5.2% year-on-year respectively. The tourism industry showed a robust recovery with a 14.9% expansion year-on-year, earning c. US$1.6bn in revenues, up 31% on 2017. Al-Shabaab attacked the Riverside hotel and office complex in Westlands Nairobi on 15 January and although it may have an impact on perceptions of safety for international tourists, the response to the attack by Kenya security forces was swift and well-coordinated. Analysts believe that al-Shabaab does not have the capability to launch another sophisticated, large scale attack in Nairobi in the near future. GDP is forecast to grow 5.9% and 5.7% on 2018 and 2019 respectively.

Inflation remains stable with a 5.7% year-on-year reading in December marginally up from 5.6%in November. Utilities, Energy and Transport rises were offset by tame food price trends. Full year Inflation was 4.7% in 2018 with is forecast at 5.7% in 2019.

Remittances reached a record high of US$1.4bn in H1 2018, representing a year-on-year increase of 55%, not only contributing to an expected improvement on the current account deficit, but also on the stability of the Kenyan shilling (KES). The KES depreciated by 0.9% in Q4 from KES100.96 to KES100.85 to the USD. The current account deficit is expected to be 5.7% of GDP significantly lower than the 2017 number of 6.3% of GDP. An 8% VAT on fuel was adopted, however, the fiscal deficit continues to be impacted by high spending and unrealistic revenue projections. The fiscal deficit is expected to be 5.9% of GDP in 2018 before narrowing to 5% of GDP in 2019.

The political environment remains stable with President Kenyata making some significant high-level appointments to deliver his Big Four Agenda. Although a long way off, some see these appointments as pointing the way towards the 2022 election.








Real GDP Growth

Source: International Monetary Fund

Kenya FX vs FV

Source: Bloomberg Spot Prices and Actis methodology for Fundamental Value


Source: International Monetary Fund


Michael Turner

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Uhuru Kenyatta
Last Election
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2022 TBD

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