The Central Bank of Kenya (CBK) has issued a projection of the economy following the completion of its survey on market perception.
The survey was carried out on the perception of banks and non-bank private sector firms on selected economic indicators including inflation, economic growth, demand for credit and exchange rate.
According to the survey report, the easing inflation and a stronger shilling have led to a lower cost of living and thus increased capacity for local investments.
The report further suggests a likelihood of a reduction in energy prices backed by the benefit of base effect and reduced cost of transportation.
However, the above trajectory could be hampered by the recent increase in global oil prices and potential headwinds from rising logistic costs due to geopolitical tensions.
Similarly, there is a likelihood of increased electricity tariffs that could mainly be influenced by a potential hike in fuel prices.
The country has also faced a downturn in economic activities majorly due to a hike in lending rates, a factor that has scared away business people seeking loans for investments.
Despite the policy taming the country’s inflation, it has led to a surge in non-performing loans.
“The high cost of borrowing due to high lending rates, resulting in higher loan repayment costs, further constraining disposable incomes for consumption and investments by households and MSMEs,” CBK stated in part.
In its previous review, the Energy and Petroleum Regulatory Authority (EPRA) reduced Super Petrol prices by Ksh7.21. Diesel was reduced by Ksh5.09 and Kerosene by Ksh4.49.
EPRA credited the recent drop to several factors including the drop in the value of the dollar. The authority set the new prices using the exchange rate which traded at Ksh148.
"The trade of petroleum products in the international markets is denominated in United States Dollars (USD), and an exchange rate is applied to convert the USD to Ksh during the computation of local pump prices," EPRA noted.
Nonetheless, the shilling has continued to soar against the dollar with the local currency trading at Ksh127 against the green buck.
This has majorly been attributed to increased inflow from the sale of Kenyan tea on the international front, coupled with investors' confidence in the country's monetary policies and diaspora remittance.
