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Economy stagnates in third quarter as construction falls

CARTOON
By | January 1st 2010

By Duncan Miriri

The economy stagnated in the third quarter of last year compared with the previous year on the back of falls in key sectors.

The Kenya National Bureau of Statistics (KNBS) blamed year-on-year declines of 3.5 per cent in agriculture, 2.4 per cent in manufacturing, 1.8 per cent in transport and communications and a 1.1 per cent fall in construction for the performance. The construction industry has been booming and helped carry the country through the global crisis in 2008

KNBS also said that gross domestic product fell 0.8 per cent on a seasonally adjusted basis in the third quarter from the second quarter.

"The flat year-on-year figure for the third quarter is well below our expectations," said Stuart Culverhouse of London-based frontier markets specialist Exotix.

"We had expected weaker growth in the third quarter, based on weakness in leading indicators such as cement consumption and new vehicle registration, and looked for year-on-year growth of 1.5 per cent for the quarter."

Kenya’s economy, which is the largest in east Africa, posted year-on-year growth rates of four per cent in the first quarter, and 2.4 per cent in the second quarter of last year. The seasonally adjusted quarter-on-quarter decline in the third quarter was the first since the end of last year.

Stalled growth

GDP rose 0.1 per cent in the first quarter from the previous three months and 1.4 per cent in the second quarter.

"As in the previous quarters in the year, persistent drought, high energy prices and the global economic recession were the main factors that restrained economic growth during the quarter," KNBS said in a statement released on Wednesday.

—Reuters

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