Kenya’s current account deficit (CAD) narrowed to 4.8 per cent of the GDP in 2020 compared to 5.8 per cent of GDP in 2019, the Central Bank said Friday.
“This reflected savings from lower oil import bill, the strong performance of agricultural exports, and resilient remittances,” said the CBK in its Weekly Bulletin on the provisional data on the balance of payments.
Diaspora remittances in 2020 rose to a record high of $3.1 billion, representing year-on-year growth of 10.7%.
Kenya’s balance of payments deteriorated in Q3’2020, with a deficit of Kshs 178.0 billion from a surplus of Kshs 13.2 billion in Q3’2019.
This translates to a balance of payment deficit equivalent to 14.5% of GDP in Q3’2020 from a deficit equivalent to 1.1% of GDP recorded in Q3’2019.
The government projects its fiscal deficit will decline to 4.9% of GDP in FY 2020/21.
- The CAD deteriorated by 10.2 per cent during Q1’2020, coming in at Kshs 110.9 bn, from Kshs 100.6 bn in Q1’2019, equivalent to 4.0% of GDP similar to what was recorded in Q1’2019.
- In Q2’2020, the current account position improved by 39.9% to Kshs 82.2 bn, from Kshs 136.9 bn in Q2’2019, equivalent to 7.0% of GDP from the 10.9% of GDP recorded in Q2’2019.
Gross domestic product (GDP) is the sum of the monetary value of all goods and services produced in a specific time period within a specified territory.
Current account deficit is the difference between the value of the goods and services that a country imports and the value of the products it exports.
GDP in Q3 2020 contracted by 1.1% compared to a 5.8% growth in Q3 2019 a modest improvement compared to Q2 2020 due to partial easing of containment measures that encouraged the progressive resumption of economic activities.
“We expect relative stability in the business environment in the coming quarter given the easing of the lockdown measures by Kenya’s trading partners, promising vaccines, continued support from the tea, coffee and horticulture exports due to the normalized demand in Kenya’s export markets and an improvement in earnings from the tourism sector,” Cytonn Investments says in Q3’2020 BOP Note.