Economy bounces to 5.7pc in first quarter

Economy bounces to 5.7pc in first quarter
File Photo of The National Treasury.

The Kenyan economy expanded by 5.7 percent in the first quarter of 2018 as compared to a 4.8 percent growth over the same period in 2017 according to the latest economic estimates by the Kenya National Bureau of Statistics (KNBS).

Growth in the economy was supported by improved performance of the agricultural sector that bounced back from a slump of one percent in 2017 owing to a prolonged drought to 5.2 percent.

Largely, most of the sub-sectors in the industry recorded improved growth except for fishing where the performance remained subdued during the quarter.

The volumes of tea produced for instance soared by 10.7 percent while the volumes of cane delivered to processors recovered from a 29.8 percent slump in 2017 to post a 17.3 percent increase.

Horticulture produce similarly rose to top Sh44 billion in exports for the quarter which is representative of a 39.1 percent gain in value for the sector.

The recuperating agricultural industry resulted in lowered prices for essential food commodities culminating to an average inflation rate of 4.3 percent for the first three month of the year which is better when compared to the 9.4 average inflation rate over the same period in 2017.

The industry’s impressive turnaround was further boosted by the resolution to the political instability witnessed following the lengthy electioneering period of 2017 earlier this year in a resolve that saw a return to business and consumer confidence with trade, manufacturing and real estate all bouncing back in the period under review.

“The significant acceleration in growth was mainly attributable to improved weather conditions and a boost in business and consumer confidence after the conclusion of general elections in 2017,” KNBS said.

The manufacturing sector grew by 2.3 percent as compared to a growth of 1.3 percent at the start of 2017.

The growth was anchored on increased production in the food subsector supported by the processing of canned fruits, processing of wheat flour, maize meal and soft-drinks.

Not all economic segments matched the impressive overall growth with financial services growing at a depressed 2.6 percent over the period as compared to the much improved 5.3 percent in the first quarter of 2017.

The regression is attributable to the continued hold on interest rate earnings for commercial banks on loans following the invocation of a 14 percent cap on lending rates in 2016 which was further cut in March with the Central Bank Rate being reviewed downwards to 9.5 percent.

Growth in the transport and storage sector also shrunk recording a growth rate of 7.1 percent as compared to 9.4 percent growth in the same quarter in 2017.

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Story By Kepha Muiruri
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