Trade deficit widens on machinery imports riseWednesday June 30 2021
Kenya’s trade deficit for the first four months of the year widened by 29.7 percent to Sh420 billion on the back of an increase in imports of commercial goods, data from the Central Bank of Kenya (CBK) shows.
The import bill grew by 22.5 percent to a record Sh669.4 billion for the period driven largely by commercial goods, which accounted for 97 percent of expenditure on imports.
Total export receipts, on the other hand, grew at a relatively slower pace of 12.2 percent to Sh248 billion, compared to the Sh221.9 billion earned over a similar period last year.
“Imports of goods increased largely as a result of improvements in imports of intermediate goods,” said the CBK in its monetary policy release last month.
The rise in imports that has driven the four-month deficit to all-time high signals a recovery in the Kenyan economy — as consumption patterns continue to rebound to pre-pandemic levels.
Last year’s shutdowns of mass production and supply chain disruptions due to the rare, Covid-led twin supply-demand shock had helped Kenya narrow the trade deficit on the back of lower imports.
This is, however, unwinding now as countries reopen their economies after the beginning of the global vaccination programme, which has resulted in a jump in international trade.
Manufactured goods which accounted for a sixth of the import bill between January-April rose by 30 percent to hit Sh130.5 billion.
Imports of machinery and transport equipment accounted for 23 percent (Sh154 billion), while mineral fuels accounted for 15.9 percent (Sh106.3 billion) and chemicals Sh112 billion.