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Kenya’s economy has withstood domestic and international shocks and is set to grow above last year’s 4.8 per cent, Central Bank (CBK) governor Kamau Thugee has said.

Thuggee said the economy will leverage a rebound in Agriculture, which had contracted because of a prolonged drought, gaining momentum in the first two quarters of 2023, to grow by 5.5 per cent, above the 3 per cent global average and much higher than sub-Saharan Africa ’s 3.3 per cent.

He said a decision by the regulator to increase the benchmark CBK rate to 10.50 per centre reigned in inflation to 7.3 per cent, within the government’s target range of between 2.5 to 7.5 per cent.\

Kenya’s economy, like other world economies, severely contracted because of the shockwaves of the Covid-19 pandemic and the Russia-Ukraine war which disrupted global trade logistics, precipitating global inflation.

“The message is that despite those shocks, the Kenyan economy has been resilient. For example, last year the economy grew by 4.8 per cent and that is really an indication of resilience in the economy because the largest sector, which is agriculture, contracted because of the drought,” Thuggee said.

He added: “So from that perspective, we feel the economy is doing very well. We have been able to address inflation by taking very strong monetary policy action in June and we have seen a slow down in inflation towards the range of government targets.”

Thuggee was speaking on the sidelines of the World Bank and International Monetary Fund (IMF) annual meetings in Marrakech, Morocco.

According to the governor, the decision by leading global economies to tighten their fiscal monetary space by raising their rates as a countermeasure to inflation impacted Kenya’s economy leading to the government increasing its appetite for domestic borrowing, which drove up interest rates.

“For us, that has impacted on us very negatively in the sense that it has crowded us out of the international capital markets. Equally important was the fact that the exchange rate has depreciated which has added to both inflation and the debt burden,” Thuggee said.