Kenya’s economy is estimated to have grown by 6.3 per cent in the three-month period to June 30, compared with 4.7 per cent over the same period last year, buoyed by agriculture and the services sector.
This is the highest quarterly growth in five years. In 2013, the country posted a second quarter growth of 7.5 per cent.
Provisional data by the Kenya National Bureau of Statistics shows that the country’s external debt increased by Ksh265.5 billion ($2.65 billion) during the three-month period. This was largely due to the government’s increased uptake of commercial loans amounting to Ksh906.4 billion ($9.06 billion).
The public and publicly-guaranteed external debt increased to Ksh2.56 trillion ($25.6 billion) during the period under review, from Ksh2.29 trillion ($22.9 billion) in the same period last year.
According to the KNBS Quarterly GDP report released last week, the accommodation and food service and information and communication technology sectors recorded the highest growths of 15.7 per cent and 12.6 per cent, respectively, while agriculture recorded a growth rate of 5.6 per cent from 0.8 per cent last year, due to favourable weather conditions.
The agricultural sector was boosted by growth in the production of key crops that benefited from sufficient rainfall, including tea, coffee, sugarcane and horticultural crops such as fruits, whose exports increased during the period.
The dairy sector remained vibrant growing at 6.1 per cent compared with a 15.9 per cent decline in the same period last year, with the volume of milk delivered to processors increasing to 152 million litres from 143.2 million litres.
Accommodation and food service activities increased by 15.7 per cent compared with 12.6 per cent in the same period last year, mainly due to improved security situation after a competitive electioneering period coupled with aggressive marketing strategies.
According to the report, the growth in accommodation services was due to improved hotel occupancy rates in various tourist zones.
The manufacturing sector expanded by 3.1 per cent compared with 0.2 per cent contraction in the same period last year, largely due to the agro-processing from increased agricultural production.
However, the construction and financial services sectors declined during the period. The financial and insurance activities sector slowed down to 2.3 per cent in the quarter under review, from 3.5 per cent in the second quarter of 2017. The construction sector slumped to 6.1 per cent from 9.5 per cent.
Activity on the Nairobi Securities Exchange also maintained a downward trend for the third year in a row.
According to the report, the NSE 20 Share Index dropped by 8.9 per cent to stand at 3,286 points during the three months’ period from 3,607 points in the same period last year.
“Over the past three years, activities of the Nairobi Securities Exchange have remained generally suppressed, pointing to a slowdown in the activities of the market,” said KNBS.
During the period, the economy was hit by substantial rises in the prices of fuels and transportation charges due to an increase in global oil prices, which rose by 45.2 per cent.