Kenya's economy grows by 4.9 per cent in first quarter

A tea picker works at a private farm at Nyansiongo, Nyamira County.

NAIROBI: Kenya's reliance on rain-fed agriculture and imports continues to limit growth in the East Africa's largest economy even as the country strives to be a regional hub for trade and investments in Africa.

Data from Kenya National Bureau of Statistics (KNBS) indicates that Kenya's Gross Domestic Product (GDP) grew by 4.9 per cent in the first quarter of 2015, a marginal 4 per cent increase from the 4.7 growth recorded over a similar period last year with inflation easing downwards 5.8 per cent compared to 6.8 per cent.

The Government's statistics body, however, states that even as the country's economy experienced relative stability over the first quarter of 2015, the shilling depreciated by 6 per cent against the US dollar, an issue that continues to be of concern to traders.

In addition to this and despite cheaper international oil prices, the country's current account worsened in the period under review mainly due to a significant increase in the import bill against a contraction in export earnings. Kenya's value of exported goods and services stood at Sh131.5 million against an import bill of Sh355.6 million over the first quarter of 2015.

"The overall balance of payments position deteriorated from a surplus of Sh8.8 billion in the first quarter of 2014 to a deficit of Sh14.3 billion during the quarter under review," the bureau states in its just-released report. The statistics body further states that deterioration in the current account balance was mainly occasioned by the increase in the import bill and the decline in the value of total exports in the same period. Of key concern was the underperformance in the country's cash crops with the production of tea and coffee, the country's primary exports registering a 27.2 and 8.6 per cent decline respectively.

ERRATIC RAINFALL

The decline in performance in tea production has been attributed to erratic rainfall and frost reported in some tea zones. Tea farmers were, however, able to recover their loss owing to high tea prices that prevailed leading to high export earnings.

Tea and coffee generated an estimated value of Sh31.3 billion from exports during the review quarter compared to Sh27.7 billion during the same period in 2014. "Overall, agriculture, forestry and fishing sector expanded by 4.4 per cent during the quarter under review compared to 2.2 per cent in 2014," states KNBS.

The sector was further buoyed by the production of cut flowers, another key export where exports rose by 11.7 per cent in the period under review. Performance in the manufacturing sector slumped, recording 3.5 per cent growth, down from a growth of 6.4 per cent over a similar period in 2014.