Economy

Kenya’s exports to key markets drop as deficit grows

Kenya’s exports to its key markets dropped in the first half of the year, widening the current account deficit by a further $125 million, to $3.16 billion.

Data from the Kenya National Bureau of Statistics (KNBS) shows that the country’s exports to Tanzania, the Netherlands, Egypt, Germany, the US and France dropped significantly compared with the same period last year.

On the other hand, the country’s imports from China have grown by 50 per cent to $1.5 billion, from $1 billion over the same period last year.

Exports to Tanzania have fallen for the third consecutive year, according to Kenya’s Export Promotion Council. Kenya’s exports to Tanzania include margarine, palm oil and its fractions, flat rolled products of iron, soap, vegetable fats, sugar, confectionery and household items.

Kenya had also hoped that the sharp fall in oil prices would reduce its current account deficit in 2015, which had been widened by weak tourism receipts, but that has not proved the case.

From the KNBS data, the country has increased its oil imports from Saudi Arabia to $339 million, up from $220.2 million over the first six months of 2014.

Mercyline Gatebi, a financial analyst at Genghis Capital, said Kenya had hoped that low energy prices and the rise in economic diversification would help to narrow the shortfall over the medium term.

“What we have seen is the country increasing the volumes of its oil imports, and of machinery from China, to service the capital projects that Kenya is engaged in. This explains the rise in the import bill from China,” Ms Gatebi said.

Of interest, however, is the drop in imports from the United Arab Emirates from $515.1 million in the first half of 2014, to $374.2 million over the same period this year.

Kenya used to source more than 50 per cent of its petroleum products from the UAE, but Saudi Arabia has replaced it as Kenya’s net oil importing partner. Other imports from Saudi Arabia include crude oil, bitumen and petroleum products.

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