1. Kenya's GDP growth rate dropped from 7.1% to 0.6% due to post-election violence in 2007, limited aid from donors, and reduced foreign investment. Inflation increased due to high food and fuel prices and drought. 2. The government took measures to create jobs, support businesses, promote trade and tourism, provide training and loans to small businesses, and increase infrastructure and social spending. 3. Key challenges include underfunding of labor institutions, lack of employment policy, and need for better coordination between government ministries.