Kenyan Economy Contracts by 1.1% in 2020 Third Quarter 

Kenya's Quarterly Gross Domestic Product Report – Third Quarter, 2020

Farmer planting barley in Kenya I David Jones - Crop Nuts

Kenya’s economy dipped by 1.1 % in the third quarter, its first recession in nearly two decades due to pandemic-related shocks, according to figures released Wednesday.  

The contraction in growth was preceded by the first contraction since September 2008 with GDP slumping by 5.5 per cent between April and June. 

 “The contraction was much lower than that recorded during the previous quarter largely against a backdrop of partial easing of COVID-19 containment measures that facilitated gradual resumption of a number of economic activities,” Kenya National Bureau of Statistics said in its quarter 3 GDP report.  

In the review period, the agriculture sector remained resilient growing by 6.3%, compared with 7.3% expansion in the April to June period.  

Tea production expanded by 13.7 per cent in the quarter under review to stand at 118.5 thousand metric tonnes. This was also reflected in the increase in the volume of tea export by 24.6 per cent from 111.3 thousand metric tonnes in the third quarter of 2019 to 138.6 thousand metric tonnes in the quarter under review.

“However, the performance of the sector was hampered by decline in number of activities such as coffee exports, milk intake, vegetable exports, and cut flower exports which declined by 17.0 per cent, 8.3 per cent, 6.9 per cent, and 6.7 per cent, respectively.”

Growth complimented by expansion in construction (16.2%), ICT (7.3%), mining (18.2%), finance (5.3%) and real estate (5.3%). 

“The robust growth in agricultural activities was driven by favorable weather conditions witnessed in the first three quarters of the year, while the substantial
growth in the construction sector was manifest in notable increase in consumption of cement,” noted KNBS.

The economy is however projected to have recovered in the fourth quarter to December according to the Central Bank of Kenya. 

“Leading indicators for the Kenyan economy point to recovery particularly in the fourth quarter of 2020, from the disruptions earlier in the year. This recovery is supported largely by strong performance in the agriculture and construction sectors, resilient exports, and continued recovery in manufacturing and services,” CBK said in a statement on Wednesday.  

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“We have now entered 2021 with minimum buffers by private sector actors, households and even government having eroded part of the shielding in 2020,” CBK Governor Patrick Njoroge said on Thursday.

“This makes building back tougher and more risky as we have to be more efficient in the use of resources. We also need to strengthen weak points to bring about a soft landing for the economy.”