NAIROBI: Kenya’s trade deficit deteriorated in the year ending March as imports accelerated to a new high.
While the East African nation imported goods worth over 21 billion U.S. dollars during the period under review, exports amounted to 7 billion dollars, according to new an economic report from Treasury received Friday in Nairobi.
The worsening of the trade imbalance was continuation from the previous periods. As of the end of the first quarter last year, the country’s imports stood at 16.8 billion dollars while exports at 5.7 billion dollars.
“The current account deficit worsened by 38.5 percent to 6.3 billion dollars in the year to March, from 4.6 billion dollars in a similar period in 2014. As a share to GDP, current account deficit amounted to 9.3 percent from 8.3 percent over the same period,” says the Quarterly Economic and Budgetary Review report for March.
The faster growth in imports was mainly accelerated by increased importation of merchandise. “The deterioration reflects a 26.7 percent worsening of the merchandise account. However, the surplus in the services account improved by 18.5 percent,” says the report.
Kenya’s leading imports include oil, which stood at 4.4 billion dollars during the period under review, machinery at 6.9 billion dollars, manufactured goods at 3.1 billion dollars and chemicals at 2.8 billion dollars.
Machinery imports, on the other hand, have risen due to the undertaking of various infrastructure projects that include construction of the Standard Gauge Railway and the Lamu Port Project at the Coast.
Leading exports are tea, which amounted to 1.3 billion dollars during the review period, manufactured goods at 670 million dollars, horticulture at 938 million dollars and raw materials at 549 million dollars.
As the imports rise, Kenya’s usable foreign exchange reserves have been on the decline, standing at 6.8 billion dollars, or 4.36 months of import cover at the end of May, down from 7.2 billion dollars in March as the shilling lost weaken against key international currencies.
