*Agriculture is a matter of concern
* High dispatch forecast for 2021 (adds details on agriculture, background)
NAIROBI, Sep 29 (Businesshala) – Kenya Central Bank Governor Patrick Njoroge said on Wednesday that he expects economic growth to improve this year, helped by sectors such as manufacturing, but the impact of drought on the agriculture sector curbing growth. can be imposed.
Growth will be 6.1% this year and 5.6% in 2022, Njoroge told a virtual news conference. He said an economic contraction of 0.3% last year was limited by policy responses, which kept the economy from shrinking further.
On Tuesday, Kenya’s central bank kept its benchmark lending rate at 7.0% with its Monetary Policy Committee saying it had taken note of emerging local and global inflationary pressures.
The central bank said reopening of services sectors, improving manufacturing and strong global demand will propel the economy this year.
Njoroge said, however, there are concerns about the agriculture sector.
“Marking a field is agriculture, and agriculture remains the most precarious mainly because of the rains. It is true that there are some parts of the country where it is raining enough and there are some parts of the country where there are droughts.
The International Rescue Committee said on Tuesday that poor rains in parts of Kenya are expected to push 2.1 million people into severe food insecurity over the next six months.
The Finance Ministry says that it has projected the economic growth rate for 2021 to be over 6%.
Kenya’s economy, like others, has been hit by the pandemic, as restrictions to curb the spread of the coronavirus slashed revenues and halted growth.
Recovery has begun, but the pace may be curtailed by a lack of COVID-19 vaccines and new waves of infections powered by the highly infectious Delta variant.
Njoroge said that the forex market should not be a cause for concern.
“We don’t expect too much concern from the forex market, and also in terms of reserves … which we think are sufficient to offset any potential shocks,” he said.
The shilling is down 1.11% against the dollar so far this year. On Tuesday, it peaked at 110.40/60, Refinitiv data showed.
Official foreign exchange reserves stand at $9.45 billion or 5.78 months of import cover.
Njoroge said remittances, one of the East African economy’s sources of foreign exchange, will grow from $3.09 billion in 2020 to about $3.4 billion this year. (Reporting by George Obulutsa Editing by Ayanat Mercy and Barbara Lewis)