Kenya’s Q1 Economic Growth Falls, Still Strong

Written by Makula Dunbar

Jul 01, 2014

Kenya’s economy has expanded by 4.1 percent in the first quarter of 2014, according to the Kenya National Bureau of Statistics latest report compared to 5.2 percent during the same quarter in 2013.

According to the report, constrained growth was due to erratic weather patterns that resulted in depressed agricultural output and insecurity concerns coupled with negative travel advisories that contracted the hotels and restaurants activities.

Agriculture and forestry grew by 2.7 percent in the first quarter of 2014 compared to a growth of 6.8 percent over a similar period in 2013 while the hotels and restaurants sector dropped by 3.0 percent during the period under review which was an improvement from a decline of 12.8 percent during the same quarter in 2013.

On the other hand, the transport and communication sector expanded by 6.0 percent compared to a growth of 5.6 percent in 2013 while the manufacturing sector recorded the highest growth of 5.0 percent during the period under review compared to a 2.5 percent growth during the first quarter of 2013.

The expansion of the manufacturing sector was mainly driven by a 6.2 percent growth in non-food manufacturing, notably the production of cement production and assembly of motor vehicles.

The communications sub-sector grew by 5.1 percent during the first quarter of 2014, slowing from a growth of 11 percent in the same quarter of 2013. The sector’s growth was mainly on account of continued uptake of new services provided through the mobile telephone networks.

The financial sector slowed down its growth to 8.3 percent in the period under review from 12.1 percent growth same period last year with domestic credit growing by 5.8 percent over the first quarter of 2014 compared to a growth of 2.9 percent in the same quarter of 2013.

Over the same period, credit to the public sector grew by 13 percent compared to 5.9 percent while credit to the private sector increased by 4.7 percent.

“The first quarter of 2014 experienced a relatively stable macroeconomic environment despite interest rates remaining comparatively high. Inflation rose moderately but was nevertheless contained at an average of 6.78 percent during the first quarter of 2014 compared to 4.08 percent in the same quarter of 2013. Over the same period, the Kenya Shilling registered slight fluctuations against the US Dollar, the Euro and the Tanzania Shilling and appreciated strongly against the Japanese Yen and the South Africa Rand while it depreciated significantly against the Sterling Pound,” the report stated.