This archive report was first published on 3 April 2020.
As the COVID-19 pandemic continues to spread globally, NCBA Bank Kenya Plc has downgraded its projection for Kenya's Gross Domestic Product (GDP) to 2.3% in 2020, citing the need for contingency measures to contain the virus.
According to the bank's quarterly economic outlook, titled 'Navigating Covid-19,' the budget deficit is expected to widen to KES 1.118 trillion, approximately 10.4% of GDP, if the government maintains its KES 2.748 trillion expenditure.
NCBA analysts also project a bias towards domestic financing due to limited financing options for the government.
NCBA Group Managing Director, Mr. John Gachora, emphasized the need to prioritize public health, stating, 'Protecting the health of the public continues to take precedence at this point with the contingency measures that are in place to contain the virus will add to the economic vulnerabilities.'
Betty Maina, Cabinet Secretary for the Ministry of Industrialization, Trade and Enterprise Development, highlighted the government's priority to support businesses in essential services, saying, 'The priority for Government during the Covid-19 pandemic is to support businesses in essential services to continue production and to address reduction in consumption.'
She added, 'What is clear is that we need to prepare for new business delivery models post covid19. This disease has opened up new opportunity for SMEs to actively participate in sectors such as pharmaceuticals, logistics, ICT and processed foods space which are expected to emerge stronger post Covid-19.'
Other key highlights from the outlook report include a drop in Kenya's imports by over KES 60 billion so far this year, mainly in industrial supplies and goods for household use, and a projected further drop in imports.
NCBA also projects that over 20,000 formal jobs may be lost this year, with many more layoffs expected in the informal sector, and that the health and ICT sectors may benefit from increased investments by the government and the shift in business operating models in favour of technology.
Published on April 3, 2020, the report anticipates concessional financing from the World Bank, AFDB, and IMF in a coordinated response to the economic crisis and sees sustained interruptions in import deliveries due to prolonged plant shutdowns in China and emerging bottlenecks causing immense market dislocations and economic pain.
