This archive report was first published on 13 January 2020.
The World Bank's 2020 Global Economic Prospect report has sparked a mix of reactions in Kenya, with some hailing it as a positive assessment of the country's economy.
According to the report, Kenya's real gross domestic product growth rate is expected to reach six per cent, making it one of the top-performing economies in Africa.
However, the report also warns of potential challenges, including global and individual economies being adversely affected by trade and geopolitical tensions, extreme weather, and financial distress in emerging markets.
Experts have pointed out that Kenya's economy is facing significant difficulties, including job losses, business closures, and bankruptcies, particularly in the core urban economies of Nairobi and Mombasa.
The government has been criticized for not acknowledging these challenges and formulating a mitigation plan, including a rescue package for firms in distress.
Instead, the government may be tempted to seek temporary solace in reports like the Global Economic Prospect, but experts warn that signs of a worsening economic situation are becoming more apparent by the day.
As the National Treasury faces the task of mobilizing funds to meet its obligations, unmitigated private sector bankruptcies and closures imply reduced public revenue, making it infeasible for the government to afford a rescue package or fiscal stimulus.
International Monetary Fund advisers are likely to push for fiscal consolidation, including measures such as cancelling or delaying major projects, abolishing public sector allowances, and freezing salaries and recruitment.
As the economic situation continues to deteriorate, experts are calling for the government to gather experts for consultations and dialogue on response options.
Meanwhile, the political elite may want to reconsider their focus on the Building Bridges Initiative (BBI) in light of the impending economic crisis.
Mr. Kennedy Chesoli is a New York-based development economist and global policy expert.
