Kenya’s current account deficit is expected to widen to 5.9% of GDP in 2022, the central bank governor said on Wednesday.
“While the current account deficit is estimated at 5.3 per cent of GDP in the 12 months to June 2022, it is projected at 5.9 per cent of GDP in 2022 on account of higher international oil prices.”
A current account deficit is occasioned by high import spending compared to export earnings.
The country’s current-account deficit is estimated to have widened to 5.3% of the gross domestic product in the 12 months to May, compared with 5.0% in the same prior-year period. The central bank said this was attributed to a higher import bill, particularly for oil, which offset the increased receipts from agricultural services exports and remittances.
“The economy is expected to remain robust in 2022, with the continued strong performance of the services sector despite the downside risks to global growth,” CBK said.
Monday, the CBK said good exports have remained strong, growing by 11.2 per cent in the 12 months to June 2022 compared to a similar period in 2021.
Receipts from tea and manufactured goods exports increased by six per cent and 22.8 per cent, respectively during the period.
The increase in receipts from tea exports reflects improved prices attributed to demand from traditional markets.
Receipts from horticulture exports declined by 8.5 per cent in the 12 months to June 2022 compared to a similar period in 2021.
Imports of goods increased by 21.7 per cent in the 12 months to June 2022 compared to an increase of 3.6 percent in the 12 months to June 2021, mainly reflecting increased oil and intermediate goods imports.
Tourism and transportation receipts have increased as international travel continues to improve.
Remittances totaled $4,012 million in the 12 months to June 2022 and were 18.6 per cent higher compared to a similar period in 2021.