Kenya's economy accelerates in second quarter despite tourism slump

Kenya's economy accelerated in the second quarter thanks to fast growth in construction, manufacturing and financial services, which offset a slump in tourism following attacks blamed on Islamist militants.

Gross domestic product rose 5.8 percent from a year earlier in the three months through June and increased 4.0 percent on a seasonally adjusted quarterly basis, the statistic's office said on Monday.

In the first quarter it had expanded 4.4 percent from a year earlier, revised to take account of a recent rebasement of GDP, and 2.7 percent on a quarterly basis.

Tourism, however, has been badly affected this year by a number of bombings in tourist areas on the coast and elsewhere, which were blamed on Islamist militants and prompted some Western countries to warn against travel to Kenya.

Output from the accommodation and restaurant sector slumped 18.6 percent in the second quarter from a year earlier, the data showed.

The slump in tourism means Kenya's economy will slow this year. Finance Minister Henry Rotich has already cut the government's 2014 growth forecast to 5.3-5.5 percent from an initial 5.8 percent, citing "challenges", without offering specifics.

Last year the economy grew 5.7 percent, taking the rebasement into account.

The rebasement of GDP last month increased the size of the Kenyan economy by about 25 percent, pushing it into the top 10 African economies.

Construction output rose by 18.9 percent during the second quarter from a year earlier, manufacturing grew 9.1 percent while financial and insurance services increased by 8.3 percent, the data showed.

Agricultural output slowed down, though, rising by 5.5 percent from a year earlier, after 5.9 percent growth in the first quarter.