1. Mr. Speaker, Honourable members of the house, it is my inescapable duty that as Minister of Finance, I appraise the nation through this August House on the performance of our economy in 2015 including the outlook of the economy in the immediate to medium term. I will therefore in my statement this afternoon, highlight developments on the macroeconomic front, fiscal, monetary and external sectors.
B. Macroeconomic Performance
2. Distinguished members, you will recall that when I presented the 2015 budget, the broad specific socio-economic policy objectives included, achieving a real GDP growth rate of above 7.0 percent; end year inflation rate of no more than 7.0 percent and containing the fiscal deficit within sustainable levels. These objectives were premised on a favorable global and domestic economic environment.
3. You will further recall that in my June, 2015 address to this house, these prospects were downcast with growth expected at around 5 percent owing to concerns emanating from external and domestic developments.
4. Mr. Speaker Sir, may I now proceed with the specific economic highlights.
Real GDP Growth
5. Sir, preliminary estimates indicate that the economy grew by 3.6 percent in 2015. This reflects the generally slow global growth which has dampened demand and indeed prices of many commodities including copper. In addition, adverse weather conditions and the electricity deficits affected output across the different sectors. The agriculture sector contracted by about 8.3 percent while mining sector output substantially slowed down growing only by 1.5 percent. However, positive growth was registered in the construction, transport and communications; and the Manufacturing sectors.
6. In 2016, the economy is expected to grow at around 3.7 percent against the budget projection of around 7 percent. The lower than expected outturn is on account of the expected continuation of adverse weather conditions, persistent electricity deficit and the challenges associated with the mining sector which have their origins in depressed commodity price, itself a consequence of a porous global economy.
7. Mr. Speaker, the Government has taken stock of the economic challenges that we have faced as a country in 2015 as well as in 2016. In this regard, government has this year taken measures to increase the resilience of the economy to both external and domestic shocks.
8. In the agriculture sector, efforts have been stepped up in developing irrigation facilities and diversifying the sector away from maize production through the introduction of the e-voucher.