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Economy

Economic growth jumps to 8-year high of 6.3pc

The Central Bank of Kenya
The Central Bank of Kenya. FILE PHOTO | NMG 

Kenya’s economy expanded at the fastest rate in eight years last year largely on increased agricultural production.

However, economists have warned that the robust growth could be hurt by poorly-distributed, below-normal rainfall in 2019.

The Kenya National Bureau of Statistics (KNBS) Thursday said the economy expanded 6.3 percent in 2018, the highest since 8.4 percent in 2010, beating majority of projections which ranged between 5.8 and 6.1 percent.

The government insisted last year’s growth will be maintained this year amid rising concern that delayed March-April-May rainfall season may shave off as much as a percentage of the forecast growth.

Treasury Secretary Henry Rotich told reporters after the launch of the annual economic performance report in Nairobi that the economy “remains resilient” and will expand by at least six percent.

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“It is still early to predict on its (drought) impact on agricultural production,” Mr Rotich said.

The 2018 growth rebounded from a five-year low of 4.9 percent in 2017 after economic activities were hurt by a biting drought in the first half, which hit farming activities hardest, and a bruising presidential contest that slowed investment.

“The growth (in 2018) was principally attributable to increased agricultural production, accelerated manufacturing activities, sustained growth in transportation and vibrant service sector activities. Agricultural activities benefited from sufficient rains that were well spread throughout the country,” KNBS said in the survey.

Agriculture and related activities such as fisheries and forestry, the mainstay of the economy accounting for more than 34 percent of the gross domestic product (GDP), recovered sharply to grow 6.4 percent in 2018 from a revised 1.9 percent a year earlier.

The growth in agricultural production, which accounts for the largest share of jobs in Kenya, in 2018 was the highest since 2010 when it notched 10.1 percent.

Sufficient “long-rains” in 2018 also spurred electricity supply — a key enabler of economic activities — to an estimated 10.5 percent growth which is the highest since 13.3 percent in 2011.

Manufacturing, the second largest creator of largely informal jobs, also recovered from a five-year low of 0.5 percent in 2017 to grow by 4.2 percent last year — the highest since 7.2 percent in 2011.

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