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Kenya Economic Update, December 2011 : Navigating the Storm, Delivering the Promise with a Special Focus on Kenya's Momentous Devolution

ACCOUNTABILITY AGGREGATE DEMAND AGRICULTURE ASSETS AUTONOMY BALANCE OF PAYMENT BANK ACCOUNTS BANK RATE BENCHMARK BILL BOND BOND AUCTIONS BUFFERS CAPACITY BUILDING CAPACITY CONSTRAINTS CAPITAL ACCOUNT CAPITAL MARKETS CASH RESERVE CASH RESERVE RATIO CENTRAL BANK COMMODITY PRICES COMPARATIVE ADVANTAGE COMPETITIVENESS CONSOLIDATION CORE INFLATION CREDIBILITY CURRENCY CURRENT ACCOUNT CURRENT ACCOUNT DEFICIT DECENTRALIZATION DEMOCRATIC REFORMS DEPOSIT DEPRECIATION DEVELOPMENT ASSISTANCE DEVELOPMENT STRATEGY DEVOLUTION DISTORTIONS DISTRIBUTION OF WEALTH DIVIDENDS DOMESTIC BORROWING DOMESTIC DEMAND DOMESTIC INFLATION DOMESTIC INTEREST RATES DOMESTIC PRICES ECONOMIC ACTIVITY ECONOMIC CIRCUMSTANCES ECONOMIC CONDITIONS ECONOMIC CRISIS ECONOMIC DISRUPTION ECONOMIC GROWTH ECONOMIC IMBALANCE ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMIC POWER ECONOMIC SHOCKS ECONOMIC SITUATION ECONOMIC SLOWDOWN ECONOMIC STRUCTURES EFFECTIVE EXCHANGE RATE EMERGING ECONOMIES EMPLOYMENT EQUALIZATION EQUILIBRIUM EQUIPMENT EURO ZONE EXCHANGE RATE EXCHANGE RATE STABILITY EXCHANGE RATE VOLATILITY EXOGENOUS SHOCK EXPORT COMPETITIVENESS EXPORT DIVERSIFICATION EXPORT GROWTH EXPORT MARKETS EXPORT PERFORMANCE EXPORTERS EXPORTS EXTERNAL POSITION EXTERNAL SHOCKS FINANCIAL CRISIS FINANCIAL FLOWS FINANCIAL INTERMEDIATION FINANCIAL MANAGEMENT FINANCIAL SECTOR FINANCIAL SERVICES FISCAL BALANCE FISCAL DECENTRALIZATION FISCAL POLICY FISCAL POSITION FOOD PRICES FOREIGN EXCHANGE FOREIGN EXCHANGE RATES FOREIGN EXCHANGE RESERVES GDP GDP PER CAPITA GLOBAL MARKETS GOVERNMENT BONDS GOVERNMENT PAPER GOVERNMENT POLICIES GROSS DOMESTIC PRODUCT GROWTH PERFORMANCE GROWTH POTENTIAL GROWTH RATE HEALTH SERVICES HIGH INFLATION HOLDING HUMAN RESOURCE HUMAN RESOURCE MANAGEMENT IMBALANCES IMPORT IMPORT CONTENT IMPORT COSTS IMPORT GROWTH IMPORT PRICES IMPORTS INCOME GROUPS INFLATION INFLATION ENVIRONMENT INFLATION EXPECTATIONS INFLATION RATE INFLATIONARY CYCLE INFLATIONARY PRESSURE INSURANCE INTEREST RATE INTERGOVERNMENTAL RELATIONS INTERGOVERNMENTAL TRANSFERS INTERNATIONAL COMPETITIVENESS INTERNATIONAL INVESTORS INTERNATIONAL PRICE INVESTMENT ASSETS INVESTMENT CLIMATE LABOR COSTS LEVEL PLAYING FIELD LEVY LIQUIDITY LOCAL GOVERNMENT LOCAL GOVERNMENT FINANCE LOCAL GOVERNMENTS MACROECONOMIC ENVIRONMENT MACROECONOMIC INDICATORS MACROECONOMIC INSTABILITY MACROECONOMIC POLICIES MACROECONOMIC STABILITY MAJOR CURRENCIES MANDATES MARGINAL BENEFITS MARKET PARTICIPANTS MARKET PRICES MIDDLE INCOME COUNTRY MIGRATION MOBILE PHONE MONETARY FUND MONETARY POLICY MONEY MARKETS MONEY SUPPLY NATIONAL INCOME NATIONAL INTERESTS NATURAL ENDOWMENTS NOMINAL EXCHANGE RATE OIL PRICE OPEN MARKET OPERATIONS POLITICAL STABILITY POLITICAL TURMOIL PRICE MOVEMENTS PRIVATE CONSUMPTION PRIVATE CREDIT PRIVATE INVESTMENT PRIVATE SECTOR CREDIT PRODUCTION COSTS PUBLIC CONFIDENCE PUBLIC DEBT PUBLIC INVESTMENT PUBLIC POLICY PUBLIC SERVICES PUBLIC SPENDING RATE OF INFLATION REAL EFFECTIVE EXCHANGE RATE REAL EXCHANGE RATE REAL INTEREST RECESSION RECURRENT EXPENDITURES REMITTANCES RESOURCE ALLOCATION RETURN SLOW GROWTH STRUCTURAL PROBLEM SUGAR PRICES SUPPLY SIDE SURPLUS T-BILL T-BILL RATES TAX TIGHT MONETARY POLICIES TRADE BALANCE TRADE DEFICIT TRADE PERFORMANCE TRADE SHOCK TRADING PARTNERS TRANSMISSION MECHANISM TRANSPORT TREASURY BILL UNCERTAINTY URBAN GROWTH URBAN SERVICES VALUE ADDED WEALTH WORLD MARKET
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World Bank, Nairobi
Africa | Kenya
2017-05-19T17:04:36Z | 2017-05-19T17:04:36Z | 2011-12

Kenya is entering a decisive year. Three main developments will make 2012 extraordinary. First, Kenya will hold national elections for the first time since the traumatic post-election violence of 2007-08, which ended Kenya's high growth momentum abruptly. Second, Kenya's economy will need to navigate through a severe economic storm, which could well become a hurricane, especially if Europe enters into a recession. Third, the country will implement its most ambitious governance reforms ever, namely the devolution of responsibility to forty-seven new counties. Kenya's policy makers will need to display tremendous skill and steadfast leadership in order to balance the need for fiscal prudence, with ensuring that resource flows to new local governments are sufficient to meet their needs. High expectations of the promise of devolution need to be met by equally high quality planning and execution of its delivery. Kenya will enter 2012 from a weaker-than expected economic position. Kenya's economy is navigating rough economic waters, where existing structural weaknesses have been compounded by short-term shocks. The most visible sign of Kenya's economic challenge is the depreciating shilling, which reached an all time low against the US Dollar in October 2011. The elements behind this situation are high international food and fuel prices, the drought compounded by conflict in the horn of Africa, the Euro crisis, widening fiscal and current account deficits, and major inefficiencies in Kenya's agriculture sector. The recent developments are also undermining one of Kenya's main strengths over the last decade: the credibility and predictability of its macroeconomic policies.

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