Kenya’s CEOs bullish despite economic headwinds

Amidst a backdrop of local and global challenges, CEOs in Kenya are expressing optimism about the country’s economic prospects for 2024.

Despite factors such as high interest rates, rising inflation, and declining disposable incomes, there is a sense of confidence driven by various factors both domestically and internationally.

According to CBK’s CEO’s Survey January 2024, this optimism is rooted in increased investment across multiple sectors, notably housing and healthcare.

Globally, expectations of a reduction in inflation and the potential cutting of the benchmark rate by the United States are contributing to a more positive outlook locally.

The survey, which targeted CEOs of key private sector organizations, including members of prominent business associations such as the Kenya Association of Manufacturers (KAM), the Kenya National Chamber of Commerce and Industry (KNCCI), and the Kenya Private Sector Alliance (KEPSA), provides valuable insights into sector-specific sentiments.

Across different industries, there are varying expectations for growth and challenges. In the real estate sector, firms anticipate growth supported by government initiatives focused on affordable housing projects.

Similarly, tourism-related businesses are poised for continued growth as they navigate a post-COVID recovery trajectory.

Conversely, challenges persist, with concerns about the rapid depreciation of the Kenyan shilling impacting the cost of goods and inputs. For instance, businesses in the manufacturing sector are grappling with low consumer demand, leading to unused inventory.

Read also: CBK raises key rate 50 points to curb sticky inflation

Increased business activity in tourism

However, the forecasted rainfall for the first quarter of 2024 is expected to alleviate some input costs and boost agricultural production, offering a glimmer of hope for sectors reliant on agricultural inputs.

Despite these challenges, there are pockets of increased business activity, particularly in tourism and professional services, driven by seasonal factors and growing demand for certain services.

The mixed performance reported by CEOs in the fourth quarter of 2023 underscores the dynamic nature of Kenya’s economic landscape, where various factors converge to shape business outcomes.

Looking ahead, economic forecasts paint a moderately positive picture for Kenya’s economy. The World Bank anticipates growth ranging between 4.5 percent and 5.2 percent, while the National Treasury of Kenya projects a slightly higher growth rate of 5.5 percent for 2024.

These projections provide a basis for cautious optimism, indicating potential opportunities for growth and development in the months ahead.

While challenges persist, the overall sentiment among CEOs in Kenya suggests confidence in the resilience and potential of the country’s economy.

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