Kenya Economy

By: EconomyWatch Content   Date: 5 April 2010

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Kenya is an East African nation with a prominent coastal line along the Indian Ocean. The country shares its borders with Ethiopia, Somalia, Tanzania, Uganda and Sudan. It is the 47th largest country in the world in terms of land area. Kenya has coastal plains at the eastern end, which rise to central highlands towards the west. Kenya’s economy suffers from a high population growth rate and rampant corruption. According to the UN Human Development Index, Kenya stands at the 147th position. The Kenyan shilling is the official currency of the nation. Nairobi, the capital city, is central to Kenya's economic profile.

Kenya Economy: Introduction

Kenya is regional hub for trade in East Africa. The country has a market-based economy with a liberalized foreign trade policy. Over reliance on agricultural production and tourism makes the economy vulnerable to international market highs and lows.

 

Kenya’s GDP has been inconsistent since its independence in 1963. During the initial years of independence, the country achieved high economic growth of 6%, which declined to below 4% in the following decades. In the 1990s, Kenya's GDP fell to below 1.5%. In 2000, the IMF and World Bank offered loans to the country to prevent a severe economic crisis with GDP growth falling to 0.2%.

 

Inflation is also a serious concern for the growth of the Kenyan economy. Since 2004, the inflation rate has consistently been above 9%. However, owing to the political instability and budget deficits, it reached 26.3% in 2009.

 

Kenya Economy: Major Statistics

Here are some of the major statistics related to the Kenyan economy:

 

Labor force

17.47 million (2009 est.)

Unemployment rate

40% (2008 est.)

Budget revenues

$6.858 billion

Budget expenditures

$8.759 billion (2009 est.)

Industrial production growth rate

2% (2009 est.)

Current account balance

-$1.859 billion (2009 est.)

Exports

$4.479 billion (2009 est.

Imports

$9.031 billion (2009 est.)

Foreign exchange reserve

$2.601 billion (2009 est.)

External debt

$7.729 billion (2009 est.)

 

Corruption is the biggest impediment to Kenya's economic growth. Following the 2005-06 foreign aid frauds, international agencies delayed fund advancements. The post-election violence in 2008 worsened the economic conditions. Thus, without the establishment of political stability, Kenya's economic growth will remain volatile.

 

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