Kenyan economy projected to see V-shaped recovery trend
The Kenyan economy has been projected to see a V-shaped recovery trend as it re-emerges from the depths of the COVID-19 pandemic.
This is according to a new survey by Renaissance Capital which sees a swift rebound path for the country.
The projected rebound is against a sharper than expected economic decline in the second quarter of the year when the Kenyan economy decline for the first time since September 2008 to shrink by 5.7 per cent from disruptions emerging from the pandemic.
Renaissance capital has based its V-shaped outlook on resilience in sectors such as agriculture which expanded by 6.4 per cent under the pandemic to offset a catastrophic hit on sectors such as hospitality & tourism.
Further, Renaissance Capital has based its predictions on historical data from the monthly published Stanbic Purchasing Managers Index (PMI) which has in the past mirrored the V-shaped rebound.
Like the alphabet V, the V-shaped economic recovery assess an economic slump quickly followed by a period of bust.
The PMI index has in recent months shown the very curve with private sector activity hitting an all time record in October against a near all time low record in April.
The PMI slumped to an all time low at the height of the contested 2017 general elections but would subsequently be followed by a significant bounce in economic activity.
The current purple patch represented in the economic expansion has been tied to the continued ease of COVID-19 restrictions by government with the accommodating stance to activity kicking off in late July.
“Business confidence has been on the rise over the last couple of months, courtesy of easing domestic containment measures which has boosted demand, albeit from a low base in April and May,” said Stanbic Bank Head of Africa Research Jibran Qureishi.
As the second wave of COVID-19 infections hit, economic experts feared for the return of tough restrictions which if invoked would have seen enterprise brought down to its knees again.
According to the Head of Research at Genghis Capital Churchill Ogutu, the large retention of previous ‘open’ rules has provided the much need respite to the economy as it strives to push back into growth over the last quarter of 2020.
“The country has been as acutely affected as during the initial containment measures. Lock-downs targeted at specific sectors such as hospitality did not materialize as per the wider expectations. The economy is still open… and closer to pre-COVID-19 levels,” he said in an earlier interview.
The economic rebound is nevertheless expected to meet needs such as jobs which have been lost to the pandemic.
While private firms ended an eight month run in job cut run in October, companies such as NCBA, Standard Chartered and Java House have signaled more job cuts ahead through planned redundancies.
NCBA has sighted a tough operating environment while Java House has indicated demand has remained subdued irrespective of the ease to restrictions leaving the food and beverage player practically over resourced.
Kenya’s unemployment rent doubled to 10.4 per cent between April and June as an estimated 1.72 million Kenyans were dumped from employment according to data from the Kenya National Bureau of Statistics (KNBS).
A survey by the Federation of Kenyan Employers (FKE) published in September meanwhile revealed the country had lost 173,743 formal jobs between March and July this year representing 80 per cent of all formal-jobs created since 2015.