PKF in Eastern Africa
In 2015, the global real Gross Domestic Product (GDP) decelerated to 3.1% in 2015 from 3.4% in 2014. The baseline projection for global growth in 2016 is a modest 3.2%, broadly in line with 2014, and a 0.2% downward revision relative to the January 2016 World Economic Outlook (WEO) update. The recovery is projected to strengthen in 2017 and beyond, driven primarily by emerging market and developing economies, as conditions in stressed economies start gradually to normalize.
We are pleased to attach a briefing on the Kenya Budget Statement for the fiscal year 2016/2017. The Finance Bill 2016 has not been issued and therefore the finer details of each of the proposals set-out in the Budget Statement may not have been comprehensively dealt with in our briefing. We will in due course issue a more comprehensive analysis of the Finance Bill 2016.
In 2014, the global real Gross Domestic Product (GDP) grew at a rate of 3.4% compared to 2013 with estimates of growth in 2015 and 2016 being 3.5% and 3.6% respectively. The nominal increase in 2015 will be driven by a rebound in the advanced economies relative to 2014, with the US leading this growth, supported by continued lower oil prices. Growth is projected to be weaker in emerging markets, reflecting more subdued prospects for some large emerging market economies and oil exporters.
Uganda’s economy continued to grow through Financial Year 2013/14 albeit more modestly than the 6.2% that was projected. This was a result of a slow-down in performance by the manufacturing, construction, telecommunication and financial services sub-sectors. Meanwhile the ongoing unrest in the region reduced export and remittance proceeds, and the last stages of the global crisis effects were played out on the world stage towards a new equilibrium.
Economic growth in Asia stabilized at a moderate level of 6.0% in 2013 almost the same rate as 2012. The region continues to be adversely affected by relatively weak external demand from developed economies, as well as an adjustment to slower growth in China. As a whole, emerging Asian economies are projected to grow at a rate of 6.9% per annum in the years 2014-2018.This growth rate largely reflects the moderate rates of expansion in the two large emerging Asian economies of China and India and a gradual recovery in export growth amid improving conditions in developed countries. Inflation in this region increased from 4.2% in 2012 to 4.6% in 2013.
Economic activities in 2012 recorded a growth of 4.6% compared to 4.4% in 2011. Macroeconomic indicators remained positive despite the imposition of monetary policies placed to tighten inflation from 2011 to mid 2012.
The new Constitution promulgated in 2010 ushered in a new, devolved system of government and created specific guidelines for the budget making process at both the national and county levels of government.
The revenue estimate for 2013/2014 is KSh 1,027.2 billion, a 7.5% increase from budget estimates for 2012/2013. The total expenditure amounts to KSh 1,640.9 billion.
Global recovery is continuing broadly. The pace of activity remains geographically uneven with economic growth in advanced economies reaching 3% in 2010 while growth rates in emerging and developing economies reached more than 7%. Capital flows to emerging market economies resumed remarkably quickly after the crisis with net foreign direct investment increasing from $274 billion in 2009 to $294 billion in 2010.
Overall the global economy is estimated to have grown by 4.6% in 2010 up from a -1% decline in 2009.
The 2012/13 financial year comes when the country is still facing significant economic challenges, which include; high fuel prices, inflation and the depreciation of the Uganda shilling against other currencies. This has threatened to reverse the country’s economic growth and long standing record of macroeconomic stability.
Real GDP growth is projected to reduce from 6.7% registered in the 2010/2011 financial year to 3.2%.