Economy expanded by Sh662b last year, says National Treasury

Freed from the chains of the Covid-19 pandemic, Kenyans are estimated to have created an additional Sh662.3 billion worth of goods and services last year.

In his Budget speech on April 7, the National Treasury Cabinet Secretary Ukur Yatani noted that the gross domestic product (GDP) or the size of the national cake, is estimated to have expanded by 7.6 per cent last year.

According to Mr Yatani, this was “a much stronger level from the contraction of 0.3 per cent in 2020.”

With a growth of 7.6 per cent, it means that the size of the economy hit Sh9.37 trillion, which is higher than the pre-pandemic levels.

This means that workers and businesses churned out an average of Sh781 billion worth of products every month last year.   

In 2020, as the government implemented stringent containment measures to curb the spread of Covid, the country’s real GDP, or one which has been adjusted for the increase in prices, contracted by 0.3 per cent in sectors such as hospitality and education.

This means that the size of the national cake shrank to Sh8.71 trillion compared to Sh8.74 trillion in 2019.

Consequently, the number of employed Kenyans in 2020 dropped to 17.41 million from 18.14 million in 2019, with a big chunk of those who lost their jobs being in the informal sector, including jua kali artisans and mama mbogas (greengrocers).

However, economic activities picked up in 2021 as the country began to lift some of the Covid-19 containment measures, including travel restrictions, and closure of pubs and restaurants, as well as schools.

In the first quarter of 2021, the economy grew at a slower rate of 0.7 per cent compared to 4.4 per cent in the same quarter of 2020, mainly owing to the onset of the pandemic in the country in March 2020, data from the Kenya National Bureau of Statistics (KNBS) shows.

“On the other hand, real GDP grew by 10.1 per cent in the second quarter of 2021 compared to a contraction of 4.7 per cent in the same quarter of 2020,” said KNBS.

In the period between April and June last year, the improved performance was supported by rebounds in most economic activities from significant contractions in the second quarter of 2020.

The growth recorded was mainly as a result of the easing of Covid-19 containment measures that facilitated gradual resumption of economic activity, noted the national statistician.

CS Yatani noted that following the easing of Covid-19 restrictions, reopening of the economy as well as targeted stimulus interventions by the government, the economy registered a growth of 9.9 per cent in the third quarter of last year.

The GDP numbers for the fourth quarter of 2021 are not available, but forecasters estimate that trend of improved economic growth continued into the period between October and December, with President Uhuru Kenyatta ending the dusk-to-dawn curfew that had been around since March 2020.  

In 2022, however, the economy is expected to grow at a slower rate owing to political undertones occasioned by the upcoming General Election as well as global pressures, including the war in Ukraine that has already resulted in a spike in food prices as well as rise in prices of energy and steel products.

This has seen the country grapple with a high cost of production.

In the last three years, the government has put in place three economic stimulus packages aimed at resuscitating the business environment, particularly small and medium enterprises, which were the hardest hit by the pandemic.