Kenya’s trade deficit for the third quarter of last year widened by 15.8 per cent on the back of an elevated expenditure on petroleum products and chemical fertilisers that exerted pressure on the shilling.
The latest data from the Kenya National Bureau of Statistics (KNBS) shows that imported volumes of petroleum products and chemical fertilisers more than doubled during the period under review.
This saw the trade deficit – the gap between imports and exports – expand to hit Sh434 billion up from the Sh366.1 billion booked in the corresponding quarter of 2021 despite the sustained reduction in prices of crude oil in the global markets during the preceding months.
“The growth in import bill was largely driven by a significant increase in imports of petroleum products, which more than doubled from Sh82.3 billion in the third quarter of 2021 to Sh182.6 billion in the third quarter of 2022,” KNBS notes in the 2022 Q3 Balance of Payments and International Trade Report.
“Murban oil prices per barrel reached USD 82.26 on September 27 from a high of USD 130.24 on March 9.”
The Sh51.1 billion expansion in the trade gap came at a time when importers battled runaway shipping costs as well as a depreciating shilling due to the continued bullish strengthening of the dollar.
KNBS data shows that during the same period, export earnings grew by 29.7 per cent to stand at Sh227.8 billion while the import bill surged 22.2 per cent to Sh661.8 billion.
“The growth in export earnings was mainly occasioned by an increase in domestic exports of tea, which rose by 45.5 per cent,” states KNBS.
Efforts by Kenya to narrow its goods trade deficit have over the years hit a snag partly due to the overreliance on traditional farm produce exports such as tea, horticulture and coffee which are largely sold raw, fetching relatively lower earnings.
In the first 10 months of last year, the gap was reported to have widened to over Sh1.3 trillion, representing a 23.09 per cent hike compared to a similar period the previous year.
A persistently higher trade deficit, economists say, slows down the creation of new job opportunities for the growing skilled youth as most revenue earned within Kenya is spent on buying goods from foreign countries, thereby raising production and job openings in source markets.
A widening deficit in goods trade also piles pressure on the shilling as the demand for dollars outstrips supply.
