Kenya's economy slows to 3.5pc in first quarter

Kenya’s economy slowed to 3.5 per cent in the first quarter of this year compared to 5.1 per cent in the same quarter last year.

It was the slowest first quarter since 2008.

“The sluggish growth was largely on account of slowdown in activities of most sectors of the economy. This was the slowest first quarter growth since 2008,” said the Kenya National Bureau of Statistics (KNBS).

According to the KNBS data released last Friday, transport and communication and wholesale and retail trade are the only sectors that contributed significantly to the overall growth.

It added that the first quarter of 2012 was characterised by high inflation rates, high interest rates and delays in the onset of the long rains.
It noted that inflationary pressure was primarily due to high oil prices, while the high interest rates were mainly due to the tightening of the monetary policy by the Central Bank of Kenya.

Further, it said that in addition to the delay in rains, agriculture sector suffered severe frost in January, which mainly affected tea and horticulture sub-sectors.

Other sectors that recorded notable improvements electricity and water, agriculture and forestry which respectively grew by 10.8, 5.9 and 2.3 per cent in the first quarter of 2012 compared to 4.8, 4.8 and 0.2 per cent, during a similar period in 2011.

“Delays with the start of the long rains no doubt contributed to this result, although quarter one was probably too early to gauge the impact of the monetary tightening seen in Kenya. It is unlikely that the quarter four 2011 tightening will have impacted all that quickly – more of a lag is likely to be at work,” said Razia Khan, head of research on Africa at StanChart.

girungu@ke.nationmedia.com