Current of living and social welfare in the

Current status of the economy

Economic growth provides a clear benchmark for economy ranking. It indicates the level at which wealth in a country increases over a given period. The level of increase in output of services and goods is used as a measure of economic growth. This is determined by the gross domestic product after adjusting for inflation.

The other significant parameter is the national income per capita. Economic growth is affected by technological advances, natural, capital resources and human as well as institutional stability. Activities in the global economy and terms of trade also have an enormous influence on economic growth (Ellis & Bank, 2007).

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In this paper, I will choose to discuss the economic growth of Kenya which is ranked as a developing country. There are many factors that make Kenya a developing country among them are low life expectancy, low level of literacy, poor health facilities, poor agricultural policies and high levels of corruption. Rapid population increase has been one of the main causes of slow economic growth in Kenya. High population growth has resulted to low per capita income hence affecting the standards of living and social welfare in the country.

Kenya’s government has been trying to be ahead of population growth, and this has been favored by the recent decrease in population growth and increase in labor force along with a rise in output per capita. Despite the hindrance of growth by these factors, Kenya has had some remarkable economic gains from political stability as well as social serenity. World Bank reports had revealed that Kenya had been recording some distress in its economic growth before 2010 when there was an incredible recovery.

Kenya has the largest economy in East Africa, and growth in its economy is expected to accelerate in the next two years due to rise in rainfall which will increase agriculture output and boost power supply to the manufacturing industry. Declining trend in exports is, however, an issue that must be addressed or else the country will have a reduced pace in its economic growth or experience economic stagnation (Furphy, 2010).

For the past two years, Kenya has had four economic shocks on its economy. These shocks are post election violence, high price increase on foodstuffs and oil due to global financial crisis and drought. Even with these factors Kenya was able to record an economic growth rate of 2.9 percent in 2009.

Kenya’s economy was shielded from enormous negative effects from global economic disaster by implementing firm, macroeconomic policies that reduced the involvement of the country in the global economy although there were consequences of reduced private flow of capital, exports and tourism revenue. The 2011 drought had an enormous impact on the agriculture sector and caused a decline of 2.4% on growth. It also affected the manufacturing industry as there was a shortage in power supply (Furphy, 2010).

Kenya has a market based economy which upholds a liberal system for external trade with a small number of infrastructure enterprises owned by the state. Agricultural sector has the biggest share in Kenya’s economy and provides support in trying to achieve a balance of payment. For the last three years, Kenya has been having a deficit on it balance of payment though this has been subsidized by other government revenues.

Towards 2011’s end, foreign exchange was highly undervalued, and this had a negative effect on the exports. Central Bank has enacted monetary policies that have currently reduced the negative effect on the valuation of Kenyan currency. Kenya has engaged in deeper regional integration and has become part of the East African Community which provides a common market. This has increased market coverage for firms in the country (Christopher, Collier, & Ndung’u, 2011).

In conclusion, Kenyan economy is positive even after the low growth in 2008 and 2009 and Kenyans should expect significant improvements in their standards of living and welfare. The financial sector is also likely to improve with provision of more credit facilities which will in turn result to increase in employment and per capita income.


Christopher, A., Collier, P., & Ndung’u, N. (2011). Kenya: policies for prosperity. Oxford: Oxford University Press.

Ellis, A., & Bank, W. (2007). Gender and economic growth in Kenya: Unleashing the Power of Women. Washington, DC : World Bank Publications.

Furphy, C. (2010, 08 02). Kenya’s economy: Infrastructure development and structural change to drive accelerated growth in the new decade. Consultancy Africa Intelligence, p. N/A.