Analysis of Economic Effect of COVID-19 Pandemic on the Kenyan Economy

Abstract

Abstract COVID-19 virus can be described as one of the worst global pandemic ever experienced in the 21st Century. Focusing on the pandemic the study main objective was to analyze direct and indirect economic effect of COVID-19 pandemic and establish the extent to which the virus has affected Kenya’s key economic sectors contributing to the country’s GDP. The study adopts a content analysis approach whose aim is to describe COVID-19 phenomenon. The study relies on diverse secondary database not limited to: World Health Organization (WHO) on COVID-19 trends, IMF, UNDP, Central Bank of Kenya (CBK), KNBS, IPAR, ICA and KIPPRA among others. Data Analysis results reveal that COVID-19 poses an unprecedented shock by disrupting economic activity. Kenya’s current account deficits has declined drastically in capital flows. The GDP in 2020 shrank to 1.1% from. 5.7% .The country is also experiencing risk of collapse of health systems that is under pressure from spread of the virus; households have fallen into poverty; and a huge number of losses of employment have been experienced across all sectors estimated to about 4.64 million. Whereas the Kenyan Government focuses on re-engineering the economy by implementing economic stimuli package of fiscal, monetary, wage, and social protection policies aimed to arrest the economic recession. The study recommends that the government may consider sovereign debt restructurings; expansion of loan programs to firms and households in the formal sector and cash transfers to cushion vulnerable households in the informal sector and promote recovery of the economy.