5% economic growth finally makes sense

Thagichu

Village Elder
#1
Those of us in business are left wondering where figures come from when the gov't says the economy is on a steady growth. The reality is that businesses are on a steady decline (if mine is anything to go by). Then I came across this story on standard (now that Guka amesema tusinunue nation).

https://www.standardmedia.co.ke/bus...an-banks-forced-to-renegotiate-with-borrowers
Specifically, this paragraph caught my attention.
The economy has been battered over the last couple of years with the average five per cent growth being supported mainly by government spending even as the real economy struggles.
It all makes sense now. Jubilee Development.

And it would all be very good until you realize that this gov't spending is supported by borrowing.

Twarogirwo nuu?
(Translation: RWNEBP)
 
#6
Those of us in business are left wondering where figures come from when the gov't says the economy is on a steady growth. The reality is that businesses are on a steady decline (if mine is anything to go by). Then I came across this story on standard (now that Guka amesema tusinunue nation).

https://www.standardmedia.co.ke/bus...an-banks-forced-to-renegotiate-with-borrowers
Specifically, this paragraph caught my attention.
The economy has been battered over the last couple of years with the average five per cent growth being supported mainly by government spending even as the real economy struggles.
It all makes sense now. Jubilee Development.

And it would all be very good until you realize that this gov't spending is supported by borrowing.

Twarogirwo nuu?
(Translation: RWNEBP)
Clearly the Starndard reporter does not understand the meaning of growth.
When broken down, GDP growth it is the value of business in various sectors.
In the last 12 months, has our agricultural output grown or not.
Has the manufacturing output grown or not..
Has tourism gone up or not.
Has banking gone up or not.. etc.
Though the government has its part, most of the growth is usually calculated from the output of private enterprises.
While it is true that many small traders have suffered, big companies still form the bulk of the output. For example, Safaricom revenue is probably equivalent to 1 million small traders' revenue.
When a small shop collapses in Mwihoko, a 10 billion skyscraper is being put up in UpperHill.
 

Taylor

Senior Villager
#7
For some reason i think i support you statement partially but go forth n support to the notion that the government spending thats simply borrowed money has a huge impact on the gdp of a country. Gdp=GDP = private consumption + gross investment + government investment + government spending + (exports – imports). Just to be clear am for uhuru n I support controlled borrowing n thats what most dont know abt the government borrowing. Dont forget money borrowed is injected into the economy what i can say is there is unfair distribution of money in the economy. Some major businesses in Nairobi are highly affected not because of anything but the introduction of devolution, and am not saying devolution is bad, devolution is creating and progressing economies in other counties.
Lets name how kenya economy get income flow
1.Diaspora remittances
2.Foreign borrowed money thats injected directly into the economy.
3.Export sales
4.foreign investment
5.private investment
6.others..add more
We import more than what we export that leaves us with a -(neg) in the gpd adding wat the government is investing on all those sectors that u mentioned agriculture,industry,tourism,health,school system,transport. Adding on government spending on infastructure wich this is a high figure but cant be against it since we do need all this roads,bridges,buildings etc add private consumption(good and services consumed over the year) here at the current moment feels really cloudy since the high prices and the upscaling growth in cost in real estate. I actually do support the high prices only if all the profits are benefiting the businesses but nobody else. High prices are not only a thing in kenya but it is wat runs the developed countries compare the prices of products in the leading countries and do more research look at the cost of production and the sales price. For instance the usa products are sold double the cost of production and prices are controlled by the government just to ensure that businesses and companies will pay their employees a minimum wage of up to 8$ an hour without affecting the economy or inflation or the value of their currency.
 
#8
Those of us in business are left wondering where figures come from when the gov't says the economy is on a steady growth. The reality is that businesses are on a steady decline (if mine is anything to go by). Then I came across this story on standard (now that Guka amesema tusinunue nation).

https://www.standardmedia.co.ke/bus...an-banks-forced-to-renegotiate-with-borrowers
Specifically, this paragraph caught my attention.
The economy has been battered over the last couple of years with the average five per cent growth being supported mainly by government spending even as the real economy struggles.
It all makes sense now. Jubilee Development.

And it would all be very good until you realize that this gov't spending is supported by borrowing.

Twarogirwo nuu?
(Translation: RWNEBP)
You do realise that most of the borrowing done by Jubilee is Domestic?
Domestic debt is seen as 'safe' debt as bond and Treasury bill owners do not impose terms and conditions on the Government.Unlike External debtors.
That is why Japan is given an AAA rating despite having debt that is over 100% of GDP(in 2012, it rose briefly to 200%) because local debt is stable.
57% of Kenya's debt is domestic while 43% is foreign. We are safe so long as that ratio is maintained or domestic goes higher.
On the Economics side, Kenya's economic growth has been driven by the Service Industry(Communication,Transport,Energy,Financial services etc).In Kenya, Services make up 60% of our GDP but employ a relatively small number of people(20%)
Agriculture which only covers around 25-30% of our GDP but employs 70% of the population has been doing very poorly
That is why the growth figures are rosy but the population is not feeling it. Most of them are in the sector that is performing poorly.
Technology is also having an impact. Banks are doing well(given the restrictions imposed on them) because banking is relying more and more on technology as opposed to people.
Most of my bank transactions,I do them on my App and online, rather than going to the banking hall.
 
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