| Summary: | Kenya's rebound from the pandemic continued in 2022. Driven by broad-based increases in services and industry, real Gross Domestic Product (GDP) increased by 6.0 percent Year-on-Year (y/y) in the first half (H1) of 2022. However, the agriculture sector contracted by 1.5 percent during thesame period, and with the sector contributing almost one fifth of GDP, its poor performance pulled back GDP growth by 0.3 percentage points. Notwithstanding the strong y/y creases, GDP has seen a marked sequential slowdown since the 2021 third quarter (Q3) as base effect dissipatedand business confidence weakened because of the global commodity market shock, a long regional drought and domestic political uncertainty in the run up to the August 2022 general elections. Business confidence however picked up in the wake of a smooth transition of power following a largely peaceful presidential election. Kenya's growth prospects remain bright; however, emerging shocks are challenging the broad-based rebound. Thebaseline assumes robust growth of credit to private sector, contained COVID-19 infections, and high commodity prices favorable for Kenyan exports to boost Kenya's growth in the medium term. However, the ongoing shocks, including the long drought in arid and semi-arid areas, rising inflation, and tighter global financial conditions, create challenges for Kenya to sustain its recovery
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