Current Account Deficit To Widen Further In 2012

Kenya's current account deficit ballooned to an estimated US$3.8bn (10.1% of GDP) in 2011 from US$2.5bn (7.8%) a year earlier. We believe that a combination of subdued demand from Europe (an important export partner) and strong demand for consumer imports will see the shortfall grow further to US$3.9bn (8.4% of GDP). However, we believe that the growing attraction of Kenyan financial assets combined with increased multilateral support will forestall a balance of payments crisis. The major risk to this view comes from political risk. Although not our core scenario, a repeat of the violence after the 2008 poll at elections

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