NAIROBI: Kenya’s 2015 second quarter economic growth is the slowest in five years, official data showed yesterday with manufacturing and construction sectors posting reduced performance. The Kenya National Bureau of Statistics data indicates national wealth expanded by 5.5 per cent down from six per cent in the same period last year.
The growth was however better than 4.3 per cent posted in 2012, but casts doubt on whether this year’s 6.5 per cent target will be achieved. The expansion was however higher than 4.9 per cent posted in the first quarter – which was better than a revised 4.7 per cent last year.
Growth in the manufacturing and construction sectors decelerated to 4.5 per cent and 9.9 per cent, respectively, from 8.3 per cent and 16.6 per cent last year. Agriculture, which accounts for about a quarter of the gross domestic product, posted an improved growth of 5.4 per cent from 2.1 per cent.
“The improved performance of the sector is attributed to increased activities in the growing of maize, vegetables and fruits as a result of favourable climatic conditions in contrast to last year,” KNBS said in a statement.
“Higher output from these core crops far outweigh farm losses of beans and potatoes, which were adversely affected by heavy rains in some regions.” During the review period, the tourism sector showed signs of recovery with accommodation and food services posting a slimmer slump of 0.8 per cent compared to 19.3 per cent a year earlier. Hotel occupancy declined by 1.9 per cent, hurt by a 39.1 per cent drop in arrivals through the Moi International Airport in Mombasa.
Arrivals through the Jomo Kenyatta International Airport however rose by 2.8 per cent on account of rising conference tourism in Nairobi. The addition of 280 megawatts of geothermal power between July and December last year and increased generation of hydro power helped the electricity and water sector grow by 10.2 per cent from 4.6 per cent. “Electricity consumption increased by 22.8 per cent during the review period,” the KNBS said.
“The increase was due to an increase in electricity connections especially under rural electrification programme, the reduction of electricity connection fees and lower power costs.” Growth in the financial services sector slowed to six per cent from 7.9 per cent. Banks grew their credit by 29.2 per cent, with loans to private sector rising 20.6 per cent to Sh2.09 trillion.
KNBS said the macroeconomic environment was fairly stable. Inflation slowed to an average of 6.99 per cent from 7.03 per cent previously, while interest rates on loans averaged 15.38 per cent from 16.68 per cent in the second quarter of 2014.
The slowdown in inflation was largely helped lower prices of fuel, electricity, transport, communication and housing, the statistics agency said. The shilling however depreciated significantly against the US dollar, held firm against the sterling pound, but appreciated against all the other major trading currencies.
