Gloomy Outlook for Kenya Businesses, Activity Slides to Record Low in April

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Kenya’s private sector activity declined sharply in April owing to the impact of the coronavirus resulting in falling demand, input shortages, and lockdown restrictions.

The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI)  showed a reading of 34.8 in April from 37.5 in March. 

An index reading of above 50 indicates an overall increase in economic activity and below 50, an overall decrease.

The headline index fell for the fourth successive month and signalled a severe decline in overall business conditions.

During the month, some businesses shedded jobs at the fastest pace in the survey history, with wages also reduced amid efforts to keep costs subdued as revenues deteriorated.

“According to most firms, the weakness in private sector activity is emanating from subdued domestic and external demand conditions, in addition to the curfew restrictions in place,” Jibran Qureishi, Regional Economist E.A at Stanbic Bank said.

“Its safe to say that, at least with anecdotal evidence available so far, the epicentre of the Covid-19 impact on economic activity will be in the second quarter of this year.” 

According to the survey, however, the longer the impact of this shock, the more acute the impact on economic output will be. 

Despite lower expectations, Kenyan firms were still positive that the economy would grow over the coming
year.