Kenya’s economy showed resilience in the second quarter of 2023, growing by 5.4% compared to the same period last year, despite the challenges posed by the COVID-19 pandemic and political uncertainty. The main driver of the expansion was the agricultural sector, which benefited from favorable weather conditions and increased output of key crops such as tea, coffee, vegetables, and fruits.
According to the Kenya National Bureau of Statistics (KNBS), the agricultural, forestry, and fishing sectors grew by 7.7% in the quarter under review, a significant improvement from the 2.4% contraction reported in the same quarter of 2022. The sector contributed 23.6% to the gross domestic product (GDP) and employed 56.9% of the total labor force.
Other sectors that supported growth during the period under review included financial and insurance (13.5%), accommodation and food service (12.2%), and information and communication (6.4%). These sectors were boosted by increased demand for digital services, domestic tourism, and credit expansion.
However, some sectors recorded slower growth or contraction due to reduced activity and supply chain disruptions. For instance, the manufacturing sector grew by 1.5%, down from 3.6% in the second quarter of 2022, mainly due to the decline in the production of sugar and soft drinks. The construction sector also registered a subdued growth of 2.6%, compared to 4.5% in the same period last year, as cement consumption increased marginally by 0.4%.
The KNBS report also revealed that Kenya’s current account deficit narrowed by 31% to $1.176 billion in the second quarter of 2023 from $1.771 billion in the same quarter of 2022. This was attributed to a 9.6% increase in the export of goods and a slight reduction in expenditure on imported commodities during the quarter under review.
The report comes amid optimism that Kenya’s economy will recover from the effects of the pandemic and achieve a growth rate of 6% in 2023, as projected by the World Bank and the International Monetary Fund. The government has also announced a series of stimulus measures to support key sectors such as health, education, infrastructure, and agriculture.
However, some challenges remain, such as high inflation, rising public debt, political tensions ahead of the 2023 general elections, and the threat of new variants of Covid-19. The KNBS report urged for continued implementation of prudent fiscal and monetary policies and enhanced vaccination efforts to sustain the economic momentum and mitigate the risks.
Source: Business Insider Africa
