GUARDED OPTIMISM FOR KENYA'S PROGRESS.

On February 28, the Central Bank of Kenya announced that the country's economy was likely to expand at a faster rate than a previous forecast of 3 percent. This is consistent with the 3.6 percent rate of growth forecast for 2005 by the International Monetary Fund (IMF), whose figures appear in the chart above.

The consensus is that since the Government of Mwai Kibaki took over after the landmark elections in 2002, the economy has shown remarkable improvement.

The Central Bank's announcement was presented in a recent local report by The Nation (Nairobi). The paper also quoted the Bank's Governor as saying that the expected expansion was the result of a reinvigorated agricultural sector. Approximately 20 percent of Kenya's GDP is accounted for by its agricultural sector, according to a 2003 estimate appearing in the The World Factbook published by the CIA. The Government has also been successful in controlling inflation. The chart above shows the percent change in inflation from year-to-year (in yellow) as well as the percent year-to-year change in GDP (in black). Inflation is expected to decline to 5 percent by December. Of note is the way the graph represents the years from 2003 to 2005. Trendlines imposed on the columns would show a steeply declining inflation line coupled with a more gently but decidedly upward sloping line representing GDP. (Please note also the year 2000 where the black GDP column appears to be missing. It has been reduced to a very thin black line just under the chart's zero axis. This is the 0.2 percent GDP contraction caused by a severe 1999-2000 drought.) But to continue with the point: Briskly growing GDP combined with sharply decreasing inflation not only indicates competent macroeconomic management on...

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