UPDATE 2-Kenyan GDP expected to grow 6.2% in 2020, central bank says

Kenya's economy is forecast to grow 6.2% this year, up from 5.7% last year, central bank governor Patrick Njoroge said on Tuesday, as regional trade shields Kenya from the effects of a global downturn. The bank expects to recover agriculture, medium, and small businesses and robust private-sector credit growth to support that growth.

"We will end up with 6.2%," Njoroge told a news conference. Kenya is East Africa's richest economy and is enjoying an extended rainy season after several years of drought. The government also lifted caps on bank lending rates last year, which had inhibited loans to private businesses.

Kenya's trade with other African countries "has a stabilizing effect. It offers a sense of security," Njoroge said. On Monday, the central bank cut the benchmark lending rate for the second meeting in a row, to 8.25% from 8.50%. It said the economy was operating below potential and it saw room for a more accommodative monetary policy.

The finance ministry said earlier this month's economic growth probably slowed to 5.6% last year, from 6.3% a year earlier, compared with the government's initial estimate of about 6%. The ministry forecasts growth of 6.1% this year, rising to 7% per annum in the medium term.

But concern has been growing over increasing public debt. Hundreds of mismanaged infrastructure projects have stalled and it will cost around $10 billion to revive them, the International Monetary Fund said this month.