The current account deficit stood at Sh85.8 billion in June, down from Sh130.4 billion in the quarter to June 2017, data from the Kenya National Bureau of Statistics (KNBS) showed.
KNBS attributed the change to increase in the value of service and income accounts.
The Sh85.8 billion deficit came as a result of merchandise import that were valued higher than the exports.
Valued free on board, the merchandise imports grew by 7.6 per cent to Sh437.1 billion while merchandise export rose by 6.3 per cent to Sh159.6 billion in the quarter.
The current account deficit narrowed by a third in the quarter to June compared to a similar period last year, a signal that the Kenyan currency was now less exposed to vagaries of global markets.
The deficit – which mostly indicates the import-export gap – stood at Sh85.8 billion in June, down from Sh130.4 billion in the quarter to June 2017, data from the Kenya National Bureau of Statistics showed.
The Kenya National Bureau of Statistics (KNBS) attributed the change to increase in the value of service and income accounts.
“Current account deficit narrowed to Sh85.8 billion, in the second quarter of 2018 from Sh130.4 billion in the second quarter of 2017. The net surpluses in the service and secondary income accounts contributed significantly to the narrowing of the current account deficit,” said KNBS.
This was the fourth consecutive quarter that the current account deficit has been on a decline, giving the shilling a stronger foundation. The deficit peaked in absolute amounts in the July-September quarter of 2017 from a similar quarter in 2015.
The Sh85.8 billion deficit came as a result of merchandise import that were valued higher than the exports. Valued free on board, the merchandise imports grew by 7.6 per cent to Sh437.1 billion while merchandise export rose by 6.3 per cent to Sh159.6 billion in the quarter.
“Merchandise imports valued on free on board (fob) basis grew by 7.6 per cent to Sh437.1 billion while merchandise exports increased by 6.3 per cent to Sh159.6 billion in the second quarter of 2018. Consequently, international merchandise trade balance deficit worsened by 8.3 per cent to Sh277.5 billion,” said KNBS.
The overall balance of payment was also in deficit to the tune of Sh33.6 billion.
The financial account net inflows declined to Sh18.8 billion in the second quarter from Sh140.8 billion in the same quarter last year.
“This was on the back of decreased inflows coupled with increased debt securities outflows mainly in portfolio investments and other investments categories,” said the KNBS.
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