Weaker industry and agriculture slow Kenyan economy in second quarter

Kenya’s economy grew more slowly in the second quarter of this year compared with the same period in 2016. (Photo: Courtesy)

 

 

 

Kenya’s economy grew more slowly in the second quarter of this year compared with the same period in 2016 due to a weaker performance in agriculture, manufacturing and financial services, the statistics office said yesterday.

The Kenya National Bureau of Statistics (KNBS) said the economy expanded by 5 per cent year-on-year in the second quarter compared with 6.3 per cent in the same period in 2016. It had expanded by 4.7 per cent in the first quarter of 2017.

The KNBS said in its statement that agriculture contracted by 1.7 per cent from growth of 7.1 per cent a year earlier, while accommodation and food services — which includes tourism — grew by 13.4 per cent, down from 15.8 per cent in the previous year.

“Performance of the agriculture sector was exacerbated by widespread drought experienced during the fourth quarter of 2016 and somewhat suppressed long rains in 2017 that considerably affected crop production and rearing of animals,” it said.

“This led to a notable slowdown in the manufacture of food as agro-processing was negatively affected by constrained supply of food products. Electricity generation was also greatly affected by reduced rains thereby necessitating increased use of thermal sources.” Tourism, along with tea, horticulture and remittances, are Kenya’s leading sources of foreign exchange.

Account deficit

Growth in the transport sector rose to 8.2 per cent in the quarter under review from 7.1 per cent in the same quarter of 2016, KNBS said, while the financial sector expansion slowed to 4.3 per cent from 8.1 per cent.

“Growth in Financial Intermediation was also dampened by the effect of continued slow uptake of credit,” KNBS said.

Kenya’s current account deficit widened to Sh134.8 billion in the quarter under review from a deficit of Sh114.1 billion in the second quarter of 2016, the statistics office said.

Earlier this month, the Finance Ministry said it had lowered its 2017 economic growth forecast to 5.5 per cent from 5.9 per cent due to drought and political uncertainty.

The country is due to hold a re-rerun of its presidential election on October 26 after the Supreme Court annulled the August 8 election citing irregularities and ordered a fresh vote within 60 days. The vote will again pit opposition leader Raila Odinga against President Uhuru Kenyatta.