NAIROBI, Oct 28: Kenya's economy is forecast to grow by 6.3 per cent in 2007 compared to a projected 6 per cent expansion in 2006, according to a central bank monetary policy statement.

The bank also estimates inflation will fall to 3.5 per cent in 2007 from 4.3 per cent in 2006 and 8 per cent in 2005.

"The growth momentum is expected to be sustained through 2006 supported by increased credit to the private sector for investment in productive sectors," the statement said, adding that liberalisation of the telecommunications and energy sectors would boost the economy.

The handing over of the Kenya Railways to a South African firm is also expected to give the economy a shot in the arm.

Jointly with neighbouring Uganda, Kenya is handing over its railway to South Africa's Sheltam Trade Close Corporation, to run the loss-making bodies for 25 years.—Reuters