(Bloomberg) -- The International Monetary Fund will revise East Africa’s biggest economy’s gross domestic product upwards this year from an earlier forecast for a contraction even after key Kenyan industries were hit by the Covid-19 pandemic.

The change in outlook is supported by an improvement in several economic indicators and the lender now expects an “upward revision” of its June forecast for the economy to shrink by 0.3% in 2020, Tobias Rasmussen, the IMF’s resident representative for Kenya, said Wednesday at a virtual investor conference organized by Renaissance Capital. The IMF will release an updated Word Economic Outlook report next month, he said.

“We have seen an upturn in most activity indicators,” Rasmussen said. “Looking at the numbers coming out of Kenya it’s fair to say that the outruns here have so far been better than what we at the IMF expected.”

Kenya’s flower industry, the largest exporter of blooms to Europe, saw export earnings increase in the period through July, as did those of tea and fruit compared to last year, according to data from the statistics agency.

Parliament’s budget office has also revised its growth outlook to between 1% to 2% from an earlier forecast of -1.5% to 1% in April 2020, citing better than expected agricultural exports.

Renaissance Capital forecasts Kenya’s economy to grow at 1.5% in 2020 driven by superior agricultural yields because of good rains, according to Yvonne Mhango, sub-Saharan Africa economist at the investment bank.

Kenya’s economy remains resilient due to its diversification and low dependency on natural resources for export, Central Bank of Kenya Deputy Governor Sheila M’Mbijjewe said at the webinar.

“There are good signs of recovery, these are visible. These are all positive, but the uncertainty remains,” she said.

The country is in talks with the World Bank for a loan to provide further budget support after receiving $1 billion in May, which followed a $750 million package approved in 2019.

The budget gap of East Africa’s biggest economy is seen at 840.6 billion shillings ($7.8 billion) in the current fiscal year, or 7.5% of gross domestic product.

Kenya, however, declined the G-20’s offer on debt relief because it “would impact on existing commercial lending terms,” M’Mbijjewe said.

Other highlights:

  • Kenya collected 47% of its domestic borrowing target in the first 2.5 months of this year which started in July, M’Mbijjewe said.
  • Note: Kenya’s net domestic financing target for 2020-21 is 493.4 billion shillings, or 4.4% of GDP; according to June budget speech.
  • Kenya’s banking sector profitability levels expected to drop to 17% this year from 23% last year, M’Mbijjewe said.
  • Emerging and frontier markets, such as Kenya may benefit from cheaper borrowing as funds seek yields in these markets, according to Charles Robertson, global chief economist at Renaissance Capital.

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