Economic Survey 1989

The outlook for the Kenyan economy for 1989 remains optimistic, although the rate of growth may be marginally lower than 1988. There are several reasons to expect continued growth in the year 1989. The early months of 1989 experienced ample and widespread rainfall. Agricultural output is, therefore, expected to register high growth on account of normal rains and improved agricultural production incentives. Consequently, agro-based manufacturing industries should also benefit and are expected to raise their output. Progressive tightening of monetary and fiscal policies have helped to reduce both the growth rate of money supply and the Government budget deficit. Given the present high rate of fixed investment in manufacturing and services, and the increase in work-in progress in the construction sector, aggregate demand is expected to rise moderately. The continued economic expansion in the industrial countries accompanied by some slight increases in the prices of beverages should augur well for Kenya's exports activity. Growth in industrial countries is also expected to increase tourist traffic to Kenya.