East Africa's economic outlook: Q1 performance & Q2 expectations

The Kenyan currency was the worst performing trading at sh162 against the dollar at the beginning of the year but closed the quarter as the best performing across East Africa exchanging at sh131. On the headwinds that impacted the highs and lows as well as East Africa's economic performance in the first quarter and quarter two expectations, CNBC Africa is joined by Pamela Akidi, Manager: Retail Sales Global Markets, Stanbic Bank Uganda.

Wed, 03 Apr 2024 15:33:03 GMT

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AI Generated Summary

The Kenyan shilling emerged as the best performing currency in East Africa by the end of the first quarter, attributed to factors such as offshore investment, infrastructure bonds, and increased export activity.
Expectations for the second quarter include economic stability, inflation improvements, and dividends from multinational companies, setting the stage for continued growth.
In Uganda, the Ugandan shilling depreciated in the first quarter but is expected to appreciate in the second quarter due to seasonal coffee flows and remittances.

East Africa has witnessed significant economic developments in the first quarter of the year, with the Kenyan currency emerging as the best performing across the region by the end of the quarter. The Kenyan shilling, which started the year trading at sh162 against the dollar, closed the quarter at sh131. This positive performance has been attributed to several key factors, including offshore investment in the Eurobond market, infrastructure bond issuances, increased activity among exporters, and reduced presence of importers in the market. These combined efforts have contributed to a stronger and more stable currency for Kenya. Looking ahead to the second quarter, there are high expectations for economic stability, inflation improvements, and reductions in food and oil prices, setting the stage for continued growth. Multinational companies like Safaricom, EABL, and Sambans are also expected to pay dividends, further boosting the economy. In Uganda, the situation has been slightly different, with the Ugandan shilling depreciating by three percent in the first quarter. However, with the anticipated seasonal flow of coffee and remittances in the second quarter, an appreciation of the currency is expected. Across East Africa, key sectors such as oil, infrastructure, and mining are set to drive economic growth, while sectors like agriculture, ICT, and services will play a crucial role in maintaining regional competitiveness. From an investment perspective, portfolio investors are likely to show increased interest in government securities and stocks, with a focus on Foreign Direct Investment (FDI) and oil projects. Overall, East Africa's economic outlook remains positive, with opportunities for growth and development across various sectors.