Kenya’s economic growth goes down to 5% as Presidential election in October rises tensions

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Kenya may not realise the projected Gross Domestic Product (GDP) growth of 5.5 per cent this year. This even after the government lowered the 2017 forecast from 5.9 per cent.

The 2017 second quarter GDP report released yesterday by the Kenya National Bureau of Statistics (KNBS) shows that growth slowed to 5 per cent, down from 6.3 per cent recorded in the corresponding quarter of 2016.

In the first quarter, the country recorded GDP growth of 4.7 per cent, putting the two month average to 4.85, 0.65 below the revised annual GDP of 5.5 per cent.

The slow growth in the second quarter is attributed to a sharp increases in food prices as a result of adverse weather conditions and a notable rise in international oil prices.

According to the report, this led to a surge in inflationary pressures with the average inflation rate increasing more than two-fold from 5.36 in the3 second quarter of 2016 to 10.8 per cent in the quarter under review.

The growth in the agricultural sector decelerated to 1.4 per cent from 7.1 per cent in the corresponding quarter in 2016 on the back of insufficient long rains that constrained supply of main food crops such as maize,

wheat and beans.

The sector’s performance was also affected by a considerable decline in the production of coffee from 14,600 in the second quarter of 2016 to 6,200 metric tonnes this year.

Consequently, other sectors of production took a hit, with manufacturing slowing from 5.3 in 2016 to 2.3 this year. The construction sector slowed by 0.1 per cent to expand 7.5.

Activities in the hotel and food service sector fell to 13.4 per cent compared to 15.8 per cent growth in 2016. Visitor arrivals through the two main airports of JKIA and Moi international Airport in Mombasa increased by 14.4 per cent from 186,685 in second quarter of 2016 to 213,543 during the quarter under review.

The growth was supported by activities of transport and storage sector which grew 8.2 per cent compared to 7.1 per cent in 2016.

The quarter also saw the country’s current account deficit widening to Sh134.8 billion from a deficit of Sh114.1 billion the same quarter the previous year. However, commercial bank lending rates dropped from an average of 18.15 in the second quarter of 2016 to 13.63 per cent in the quarter under review.

Posted in Business, Top Stories

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