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Kenya Business Forecast Report Q4 2012 - New Market Report Now Available

New Country Reports research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 09/25/2012 -- Core Views: We believe that Kenyan economic activity will pick up over the course of 2012 as inflation falls and monetary policy is eased. We are forecasting full-year real GDP growth of 4.9%, up from an estimated 4.1% in 2011. Furthermore, we believe growth will accelerate further to 6.0% in 2013 as sentiment improves following the conclusion of elections early in the year. We maintain our view that monetary easing will begin around the middle of the year. We forecast 250 basis points of cuts to the benchmark interest rate during 2012, with the rate ending the year at 15.50%. While the High Court's ruling that elections will take place in March 2013, rather than August 2012, provides clarity on the timing of the vote, there is still a great deal of uncertainty surrounding the election. It is unclear whether two prominent politicians will be eligible to run because of ongoing proceedings at the International Criminal Court in The Hague. There is also likely to be a great deal of horsetrading, with alliances likely to be made and broken in the run-up to the election. Major Forecast Changes Upward revisions to BMI's oil price forecasts for 2012 and 2013 have led us to increase our expectations for Kenya's current account shortfalls in each year. We now see the deficit rising to US$4.5bn in 2012, up from an estimated US$4.0bn in 2011, before narrowing slightly to US$4.4bn in 2013. Key Risks To Outlook The weather poses risks to our views on growth, inflation, the currency and the balance of payments position. Another season of inadequate rain would undoubtedly have negative ramifications for all of these. Another major risk stems from elections. Although by no means our core scenario, we cannot rule out the possibility of a repeat of the unrest which followed the last poll in 2007, which would have negative implications for the economy. Our core scenario for Kenyan growth assumes a mild recession in Europe. If the situation ends up being far worse (eg, a breakup of the eurozone), Kenya would be negatively affected through its trade and financial links not only to Europe but also the rest of the world.

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