Douglas Mwiti 
KNBS 2024 Economic Survey Report Launch;
In 2024, the global economy is expected to grow at a similar pace as 2023, but slower than the historical (2000–19) annual average of 3.8 percent.
This is on account of restrictive monetary policies,withdrawal of fiscal support, low underlying productivity growth, as well as escalating geopolitical fragmentations that could result in higher commodity prices despite a projected decline in global headline and core inflation.
On the domestic front,Kenya’s economy is projected to remain resilient in 2024 mainly supported by a robust services sector,strong performance in agriculture aided by anticipated adequate rainfall and a decline in global commodity prices that is expected to reduce the cost of production.
In addition, the distribution of the subsidized fertilizer and seed subsidy program is expected to support the agriculture sector’s growth.
This is revealed through the leading indicators that point to continued strong performance of the economy in the first quarter of 2024, on account of robust activities in the agriculture and service sectors,particularly accommodation and food services, as well as information and communication.
Further, the ongoing implementation of measures by the Government in priority sectors namely: Agricultural Transformation and Inclusive Growth; Micro, Small and Medium Enterprise (MSME) Economy;Housing and Settlement; Healthcare; and Digital
Superhighway and Creative Industry under the Bottom-Up Economic Transformation Agenda (BETA)is expected to boost economic activity, accelerate growth as well as support recovery.
On the demand side, the easing of inflationary pressures is likely to lead to a strong household disposable income,
which will in turn support household private consumption and robust private sector investments coupled with Government investments.
This notwithstanding, the outlook for the domestic economy may be hampered by risks related to unpredictable weather conditions occasioned by climate change which could adversely affect agricultural production and result in domestic inflationary pressures.
The tight fiscal stance being pursued by Government may also lead to tight liquidity affecting aggregate demand. Externally, escalation nof geopolitical tensions particularly the Israel-Palestinian, Israel-Iran and Russia-Ukraine conflicts could result in higher commodity prices which would pose a risk to domestic inflation outcome
Overview
The global economy remained resilient in 2023 despite the disruptions emanating from the residue effects of COVID-19, the Russia-Ukraine conflict and tightened monetary policies in a number of economies.
Growth int he world real Gross Domestic Product (GDP) slowed to 3.1 per cent in 2023 compared to 3.5 per cent in 2022.
The slowdown was more pronounced across advanced economies than in Emerging Markets and Developing Economies (EMDEs).
Advanced economies expanded by 1.6 per cent in 2023 compared to the 2.6 per cent growth in 2022.
The slowdown was mainly driven by slowdown growth in the Euro Area and the tighter monetary conditions in most of the economies in the bloc.
Growth in EMDEs remained at 4.1 per cent in the period under review.
This growth was mainly supported by the easing of financial conditions, strong domestic demand and increased investments in most of the economies in the EMDEs. Sub-Saharan African (SSA) economies grew by 3.3 per cent in 2023 compared to 4.0 per cent growth in 2022.
The growth was mostly supported by strong performance in non-resource-intensive countries and improvement in macroeconomic conditions.
Further growth was curtailed by the global slowdown, unfavourable weather conditions and domestic supply chain disruptions across the bloc.
East African Community (EAC) recorded a growth of 5.0 per cent in 2023 compared to 5.2 per cent recorded in 2022, a growth that was higher than the SSA
East African Community(EAC)
The real GDP of the East African Community(EAC-5) bloc grew by 5.0 per cent in 2023, compared to a growth of 5.2 per cent in 2022.
This deceleration was partly attributed to a combination of external factors, such as fluctuations in commodity prices and budget challenges.
Inflation rate eased from 7.1 percent in 2022 to 6.8 per cent in 2023. The region’s current account deficit, as a percentage of GDP, narrowed to 6.0 per cent in 2023 from 6.2 per cent in 2022.
The EAC bloc had mixed economic performances across its member states, reflecting the diverse impacts of regional and global economic dynamics on the regional economies.
1.20. Kenya’s real GDP growth rate was 5.6 per cent in 2023, compared to a growth of 4.9 per cent in2022.
Tanzania’s economy grew by 5.2 per cent in 2023, driven by its robust agricultural sector, mineral exports, and a resurgence in the tourism industry.
Inflation rate was relatively controlled at 4.0 per cent,mainly due to the tight monetary policies.
Uganda’s economy grew by 4.6 per cent in 2023, compared to a growth of 6.4 per cent in 2022. Inflation rate in Uganda eased from 7.2 per cent in 2022 to 5.8 percent in the period under review.
Rwanda’s economy grew by 6.2 per cent in 2023,compared to 8.2 per cent in 2022. The economy benefited from government investment in infrastructure and a strong services sector. Inflation rate stood at 14.5 per cent in 2023 compared to 13.9 per cent in 2022.
Additionally, the current account deficit as a percentage of GDP widened from 9.8 per cent in 2022 to 12.7 per cent in 2023, mostly due to growth in imports of capital inputs and consumer goods.
Burundi’s economy expanded by 3.3 per cent in 2023 compared to 1.8 per cent in 2022, mainly owing to continued growth in public investment in the transportation and energy sector.
The country faced significant inflationary pressures, with the inflation rate standing at 20.1 per cent, the highest in the bloc, mainly due to high food and energy prices.
The economies Of Democratic Republic of the Congo (DRC) and South Sudan, the recent entrants to the EAC block, grew by 6.7 per cent and 3.5 per cent,respectively, in 2023.
Summary and Outlook;
World real GDP growth is estimated to have slowed from 3.5 per cent in 2022 to 3.1 per cent in 2023.
The decline in the growth was attributed to disruptions emanating from the remnant effects of COVID-19, the Russia-Ukraine conflict and tightened monetary policies in a number of economies.
Advanced economies expanded by 1.6 per cent in 2023 compared to 2.6 per cent growth rate experienced in 2022 largely due to tighter monetary conditions within the bloc and a lower than anticipated growth rate in the Euro Area. Growth in Emerging Markets And Developing Economies (EMDEs) remained at 4.1 percent in the period under review. Sub-Saharan Africa (SSA) region saw a decline in real GDP growth rate to stand 3.3 per cent in 2023, compared to 4.0 per cent growth in 2022.
Three of the region’s largest economies Nigeria,South Africa, and Angola recorded slower growth rate.
East African Community (EAC) recorded a slower growth rate of 5.0 per cent in 2023 compared to 5.2 per cent growth recorded in 2022 as a result of fluctuations in commodity prices and budget challenges.
World inflation eased to 6.8 per cent in 2023 from 8.7 per cent in 2022 partly due to lower energy prices, easing of the supply chain disruptions and a tighter monetary policy to reduce aggregate demand for goods.
Global Trade volume slowed to 0.4 per cent in 2023 compared to the 5.2 per cent growth recorded in 2022.
This decline was mainly due to base effects as the world economy recovered from the COVID-19 pandemic.
Global unemployment declined to 5.1 per cent in 2023 from 5.3 percent in 2022 supported by expansion of employment opportunities particularly in advanced economies.
Economic Performance
Real Gross Domestic Product (GDP) expanded by 5.6 percent in 2023 compared to a revised growth of 4.9 percent in 2022.
The positive growth was notable across most sectors of the economy.
The Agriculture, Forestry and Fishing sector grew by 6.5 per cent in 2023, marking a recovery from the 1.5 per cent contraction recorded in 2022.
This recovery was mostly attributed to favourable weather conditions that prevailed through most of the year.
Other key drivers of the growth included formation and Communication (9.3%), Transportation and Storage (6.2%), Financial and Insurance
(10.1%), Real Estate (7.3%) and Accommodation and Food service activities (33.6%) sectors.
However, the Mining and Quarrying sector recorded a 6.5 per cent contraction, largely attributable to a decline in production of most of the minerals such as titanium and soda ash.
In 2023, agriculture remained the dominant sector,representing 21.8 per cent of the total GDP. Combined, service activities contributed 61.3 per cent of the GDP while industry-related activities comprised 16.9 per cent of the GDP in 2023.
Nominal GDP grew by 12.0 per cent reaching KSh15,108.8 billion in 2023, from KSh 13,489.6 billion in 2022. Gross National Disposable Income increased to KSh 15,882.5 billion in 2023 from KSh 14,051.0 billion in 2022.
Additionally, the Gross Domestic Product (GDP) per capita at current prices improved to KSh 293,229 in 2023 from KSh 266,473 in 2022.
Private final consumption expenditure increased to KSh 11,517.1 billion from KSh 10,106.6 billion recorded in 2022, accounting for slightly above three-quarters of the total GDP.
Similarly, government final consumption expenditure increased from KSh 1,647.5 billion in 2022 to KSh 1,800.2 billion in 2023.
Employment, Earnings and Consumer Prices Employment in the modern and informal sectors,excluding small-scale farming and pastoralist activities, went up from 19.1 million in 2022 to 20.0 million in 2023.
Total new jobs generated in the economy were 848.2 thousand in 2023. In the year under review, wage employment in the modern sector grew by 4.1 per cent which translated to creation of 122.8 thousand new jobs in the sector.
The informal sector created 720.9 thousand new jobs and accounted for 85.0 per cent of all the new jobs created in 2023.
Public sector wage employment registered a growth of 5.9 per cent in 2023 compared to 1.6 per cent recorded in 2022.
The nominal wage bill rose by 7.3 per cent to KSh2,798.6 billion in 2023.
The private sector wage bill went up by 8.2 per cent to KSh 1,965.9 billion in 2023, while the public sector wage bill increased by 5.3 per cent and accounted for 29.8 per cent of the total wage payments in 2023.
The Teachers Service Commission wage bill rose by 6.5 per cent to KSh285.0 billion and accounted for 34.2 per cent of total public sector wage bill in 2023.
In the year under review, overall annual average earnings increased by 3.4per cent to KSh 894,232.8 compared to KSh 864,750.1 in 2022.
Annual average earnings in the private sector increased by 5.4 per cent to KSh 920.0 thousand in 2023, while those in the public sector decreased by 0.5 per cent to KSh 838.7 thousand in 2023.
Overall,real annual average earnings per employee decreased by 4.1 per cent to KSh 667.3 thousand in 2023.
Real annual average earnings per employee in the private sector declined by 2.5 per cent to KSh 686.4 thousand in 2023, while those in the public sector declined by 7.8 per cent to KSh 625.9 thousand over the same period.
The annual inflation rate as measured by the Consumer Price Index (CPI) was 7.7 per cent in 2023 as was recorded in 2022.
The inflation was largely driven by increase in prices of Transport (12.2%); Food and Non-Alcoholic Beverages (9.7%); and Housing, Water,Electricity, Gas and Other Fuels (8.1%).
Money, Banking and Finance
During the review period, the Central Bank Rate (CBR) was raised to 10.50 per cent as at June 2023, and 12.50 per cent as at December 2023 compared to 8.75 in December 2022.
This was necessitated by the need to address inflationary pressures occasioned by depreciation of the Kenyan Shilling against major currencies and high global prices during the review period.
As a result, overall interest rates increased during the review period.
The 91-Day Treasury bill interest rate increased to 15.70 per cent in December 2023 from 9.33 per cent in December 2022.
The Inter-bank rate rose to 11.65 per cent in December 2023 from 5.39 per cent.
Average commercial bank interest rate for loans and advances increased to 14.63per cent in December 2023 from 12.67 per cent as at December 2022.
Money supply (M1) grew by 4.0 per cent to KSh2,024.5 billion at the end of 2023 compared to a 7.0per cent growth as at end of 2022. Similarly, broad money supply (M3) recorded a growth of 19.9 percent to KSh 6,044.3 billion, as at the end of 2023.
The real value of broad money supply (M3) – deflated using December consumer price indices contracted from KSh 4,583.6 billion as at December 2022 to KSh4,394.4 billion as at December 2023. The real value of commercial banks’ deposit liabilities also declined to KSh 3,674.6 billion as at December 2023.
On the other hand, the real value of total commercial bank credit increased to KSh 4,425.9 billion as at the end of December 2023 and the real value of total liabilities to the banking system increased by 12.9 per cent to KSh 5,362.6 billion as at end of December 2023.
The net foreign assets registered a significant increase of KSh 509.0 billion as at December 2023 compared to a decrease of KSh 305.9 billion as at December 2022.
Total assets of deposit taking financial corporations grew by 19.8 per cent to KSh 6,044.5 billion as at end of 2023.
Assets and liabilities of commercial banks increased to KSh 5,241.6 billion as at December 2023 compared to KSh 4,314.9 billion as at end of December 2022 while assets and liabilities of MFBs declined by 5.2 per cent to KSh 43.8 billion as at the end of December 2023 compared to a decline of 7.0per cent as at the end of December 2022.
Assets and liabilities of Deposit Taking Savings and Credit Cooperatives grew by 9.8 per cent from KSh 522.4 billion as at December 2022 to KSh 573.6 billion as at December 2023.
Credit advanced by commercial banks to privates ector grew by 13.9 per cent to 4,078.1 billion as at December 2023, while credit by commercial banks to National Government declined by 3.6 per cent to KSh1,720.3 as at December 2023.
Similarly, total domestic credit extended by micro-finance banks increased by 1.8 per cent to KSh 49.4 billion as at December 2023 from KSh 48.6 billion as at December 2022. Credit to private sector by micro-finance banks declined by 7.6 per cent to KSh43.1 billion as at December 2023.
Additionally, credit from Deposit Taking Savings and Credit Cooperatives to private sector and Government Increased by 11.6 per cent and 33.3 per cent to KSh655.4 billion and KSh 14.2 billion, respectively as at December 2023.
Total bond turnover during the period under review declined by 13.2 per cent to KSh 644.0 billion from KSh 741.9 billion recorded in 2022. General Insurers’
investments grew by 4.7 per cent from KSh 156.5 billion in 2022 to KSh 163.9 billion in 2023, While Investments of the long-term reinsurance business grew by 11.9 per cent to KSh 61.7 billion in 2023.
Total assets of pension funds increased by 9.5 percent during the review period to KSh 1,725.4 billion as at December 2022, with assets held in government securities growing by 13.4 per cent to KSh 818.9 billion as at December 2023.
Public Finance
National Government revenues, including grants are expected to grow by 30.2 per cent to KSh 3,025.7 billion while expenditure is estimated to grow by 26.6
Agriculture Sector
The agriculture sector reversed the negative growth
trend recorded since 2021 to register an impressive recovery of 7.0 per cent in 2023. This was a result of favorable weather conditions; expansion in area under crop as a result of farmers anticipating high prices for their produce; and enhanced government interventions that included the fertilizer subsidy programme.
Maize production recorded an increase of 38.8 per cent to 47.6 million bags in 2023.
This was attributed to expansion in area cropped; promise by the government to buy maize from farmers under the guaranteed minimum returns principles; improved weather conditions;and increased access to subsidized fertilizer.
Exports of fresh horticultural products expanded by 9.9 percent from 391.5 thousand tonnes in 2022 to 430.2 thousand tonnes in 2023.
Paddy production recorded a growth of 19.1 per cent, totaling 229,064 tonnes in 2023, primarily due to expanded areas under irrigation.
Marketed milk production rose by 6.9 per cent from 754.3 million litres in 2022 to 806.6 million litres 2023 as a result of improved pastures and fodder.
