The Washington-based institution predicts growth of 4.0 percent in 2010 for east Africa's largest economy this year, up from a projection late last year of 3.5 percent. The bank expects good rains to boost the agriculture sector that accounts for a quarter of GDP.
The forecast, along with the government's own of 4-5 percent, signal a return to faster growth after a post-election crisis, drought and the global financial crisis cut it to 1.6 percent in 2008 from 7.0 percent in 2007.
"The drivers of Kenya's economy are not in balance," the World Bank said in the report, referring on an over-reliance on the domestic sector, which accounts for more than half of the growth domestic product.
"Kenya's weak engine is exports — declining from 40 percent of GDP in the 1960s to 26 percent today — brought down by a seriously underperforming manufacturing sector."
Manufacturing is the fourth largest sector, behind agriculture, transport and communication as well as wholesale and retail. It accounts for 11 percent of GDP. The report said that in order to boost exports, the country has to improve its port of Mombasa, which is a gateway for the region, handling export of raw materials and much needed imports of oil and other goods.
"The port of Mombasa is still under-performing. Despite recent improvements, reforms have not kept up with momentum in other African countries," the bank said.
Mombasa could play a bigger role in the region with expected oil production in Uganda expected to drive up machinery imports. The growth of South Sudan could also push up demand for services at the port, the World Bank added in the report.
Kenya's growth picked up in the last quarter of 2009, extending into 2010 and raising optimism, on the back of good rainfall and a resurgence of tourism, after a poor run in 2008.
The bank said that should the positive trend continue, the economy could grow by 5 percent in 2011, bringing the country back into the high growth momentum it experienced in 2004-2007.
Officials forecast that the economy will post a 4-5 percent growth in 2010.
An upcoming referendum on a proposed new constitution in August, which polls have showed is likely to be adopted by voters, has also boosted confidence because it is viewed as important for political stability.
