The Central Bank of Kenya (CBK) has cut its 2023 economic growth projections for Kenya from 6.1 percent to 5.8 percent on prolonged drought effects, which had left the sector in recession last year.
The CBK says it had to revise its gross domestic product (GDP) growth forecast after the extended dry conditions in the opening quarter.
“We have looked a little carefully at agriculture and the development in the sector in light of the weather conditions that have prevailed in January, February and the first half of March,” CBK Governor Dr Patrick Njoroge said Thursday.
The latest data from the Kenya National Bureau of Statistics (KNBS) shows that the agriculture sector contracted by 0.6 percent in the third quarter to mark the fourth consecutive quarter of decline for the lead sector.
Kenya’s continued reliance on rain-fed agriculture has left the sector on the back foot, with the industry flirting with yet another dismal outcome this year.
“The slowdown performance of the sector was mainly attributable to favourable weather conditions that prevailed in the first three quarters of 2022,” KNBS had noted.
An analysis of KNBS data to the end of September last year shows the sector is now contributing to less than one-fifth of GDP following four consecutive quarters of decline.
The KNBS data to the end of the third quarter of 2022, for instance, places the contribution of the sector at 19.9 percent, in contrast with 23.4 percent in the quarter to March.
Last year, the sector contracted by 0.7, 1.4 and 0.6 percent, respectively, rounding off to an equivalent year’s decline after a contraction in the fourth quarter of 2021.
Productivity in the sector is, however, set for a rebound from the normalisation of long rains, which set in earlier this month.
Nevertheless, the sector could see yet another twist to the tale with the CBK highlighting the expectation for abnormal short rains, which would portend crop damage late in the crop year.
“We have got reasonable assurances from the metrological department that the long rains we now have will be normal. The expectation on the short rains, however, is that we may have the El-Nino effects, which puts all our bets off,” added Dr Njoroge.
Other sectors are expected to remain resilient, with accommodation and food services leading the way with a projected growth rate of 11.2 percent.
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Education, ICT, wholesale and retail trade and transport and storage are among other sector projected to deliver growth above the 5.8 percent mean rate at 8.5, 7.9, seven and 6.1 percent, respectively.
CBK, meanwhile, estimates GDP growth to have come in at 5.6 percent last year, with the rapidly rebounding accommodation and food services sector expected to post a 30.7 percent growth rate.
Despite the fading agricultural sector clout, the sector is still charged with creating the bulk of jobs in the economy. Data from KNBS shows the sector contributed to 295,300 modern sector jobs in the private sector across 2021 and 41,900 persons in the public sector within the same period.