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Economic & Sector Work :: Policy Note

Economic Impact of the Political Crisis in Kenya : 2008 and Beyond

AGGREGATE DEMAND AGRICULTURE AUCTION BALANCE OF PAYMENT BALANCE OF PAYMENTS BANK RATE BASIS POINTS BID BUDGETARY SUPPORT BUSES BUSINESS ENVIRONMENT CAPITAL ACCOUNT CAPITAL ASSETS CENTRAL BANK COMMODITIES COMPETITIVENESS CONSUMER PRICE INDEX CONSUMPTION LEVELS CREDIT ASSOCIATIONS CREDIT RATING CURRENCY CURRENT ACCOUNT CURRENT ACCOUNT DEFICIT DEFAULTS DEMAND FOR CREDIT DEVELOPMENT PROJECTS ECONOMIC GROWTH ECONOMIC POLICIES EQUIPMENT EXCESS LIQUIDITY EXCHANGE RATE EXPENDITURE EXPENDITURES EXPORT VOLUMES EXPORTS FINANCIAL HEALTH FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FISCAL CONSTRAINT FISCAL DEFICITS FOOD PRICES FORECASTS FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES GDP GLOBAL SLOWDOWN GLOBAL TRADE GOVERNMENT EXPENDITURES GOVERNMENT PAPER GROWTH PROJECTIONS GROWTH RATE GROWTH RATES HIGH ENERGY HOLDINGS IMPORT IMPORT DEMAND IMPORTS INCOMES INFLATION INFLATION RATE INFLATION TARGET INTEREST RATES INTEREST RATES ON TREASURY BILLS INTERNATIONAL CURRENCIES INTERNATIONAL INVESTORS INVESTMENT CLIMATE INVESTMENT PROJECTS INVESTOR CONFIDENCE LAND OWNERSHIP LIQUIDITY LIQUIDITY CONDITIONS LOCAL CURRENCY LONG-TERM LOCAL CURRENCY LORRIES LOSS OF CONFIDENCE MAJOR CURRENCIES MICRO CREDIT MONETARY POLICY MONEY MARKETS MONEY SUPPLY NATIONAL OUTPUT OIL PRICES OUTPUT PHYSICAL ASSETS POLITICAL SENTIMENT POLITICAL STABILITY POVERTY REDUCTION PRICE INCREASES PRIVATE CONSUMPTION PRIVATE VEHICLES PRIVATIZATION PUBLIC EXPENDITURES RAILWAY REAL APPRECIATION RECURRENT EXPENDITURE RECURRENT EXPENDITURES REGULATOR RELATIVE PRICES REPAYMENTS REPO REPO RATE RESETTLEMENT RETURN RETURNS ROAD ROAD NETWORK ROADS ROUTES SETTLEMENT SLOWDOWN SOCIAL CAPITAL STRUCTURAL PROBLEMS SUPPLY CONSTRAINTS SUPPLY-SIDE TRADE DEFICIT TRADING TRANSACTION TRANSPORT TRANSPORT SECTOR TRANSPORTATION TREASURY TREASURY BILL TREASURY BILL RATE UNCERTAINTIES VALUE ADDED WORLD PRICES
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Washington, DC
Africa | Kenya
2014-08-20T20:31:24Z | 2014-08-20T20:31:24Z | 2008-04-15

This note reviews the performance of key sectors of the Kenyan economy after the power-sharing arrangement of 2008. Declines in the agricultural, manufacturing, and services sectors considered in this note are estimates. Data collected and information interpreted provides picture of the broad orders of magnitude anticipated of the economic decline. Assuming that the power-sharing arrangement holds and the country returns to normalcy, a base case economic growth rate of about 3 percent could be expected for 2008. If a credible set of measures is steadily implemented and the fiscal constraint is managed well, these could add 1-1.5 percentage points to the base case rate of 3 percent. On the downside, continued sporadic ethnic violence, inability of coalition government to reach key decisions, and lack of donor support could result in zero or negative growth rates in 2008. The note is organized as follows. Sections I and II present the macro effects of the crisis and sectoral developments which are then used to calculate the real output expectations in 2008, as well as discuss factors that would determine the extent to which longer term prospects also are affected. Section III focuses on the poverty situation. Fiscal issues are taken up in section IV. External accounts are discussed in section V. Financial markets and issues related to investor confidence are in section VI.

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