Kenya’s Q1 economy dropped by 0.9 per cent compared to a similar period in 2022 amid a slowdown in economic activities.
Data from the Kenya National Bureau of Statistics (KNBS) shows that economic growth in the first four months of April dropped to 5.3 per cent from 6.2 per cent during a similar period in 2022.
“Kenya’s economy expanded by 5.3 per cent in the first quarter of 2023, compared to a 6.2 per cent growth in the corresponding quarter of 2022,” KNBS said in a statement.
“The growth was largely supported by a rebound in agricultural activities.”
“The significantly improved performance of the sector was attributable to favourable weather conditions that led to enhanced production, especially that of food crops during the period under review. The performance was evident in the significant increase in export of vegetables and fruits recorded during the quarter in review,” KNBS stated
The decline came at a time when the country was battling high inflation caused by rising fuel prices and dwindling purchasing power.
However, the country recorded growth in export earnings that increased by 9.4 per cent to Sh233 billion, boosted by improved earnings from tea, iron and steel, titanium ores, and concentrates.
The manufacturing sector expanded by two per cent compared to 3.8 per cent growth in the corresponding year.
“In the manufacture of food products, growth was mainly supported by manufacture of bakery products and processing and preservation of fish which expanded by 15.2 and 7.2 per cent, respectively,” KNBS says.
However, the construction sector recorded a decelerated growth of 3.1 per cent in the quarter under review, compared to the six per cent growth realised the previous year.
The decelerated growth was a result of declined cement consumption which declined by 7.7 per cent.
Analysts’ commentary
“Kenya’s general business environment deteriorated in the first half of 2023, with the average Purchasing Manager’s Index for the first five months of the year coming at 48.9, compared to 49.7 recorded in a similar period in 2022.
The deterioration was mainly on the back of the elevated inflationary pressures experienced in the country, which have seen consumers cut back on spending, coupled with aggressive depreciation of the Kenyan shilling which has contributed significantly to the fall in production output by most businesses,” Cytonn Investments’ Cytonn H1’2023 Markets Review.
Kenya Economy Recovering But More Can Be Done: Cytonn Investments
