Kenya’s current account deficit narrowed to 4.2 percent of GDP in the 12 months to May from 5.8 percent in the corresponding period in 2018 buoyed by higher horticulture and tourism inflows.
The current account measures the balance between hard currency inflows and outflows and affects the strength of the shilling.
By the end of last year, the deficit stood at five percent, but has been progressively narrowing this year.
In the 12 months to April the deficit stood at 4.5 percent, meaning the country’s position improved in May.
“This reflects strong performance of exports particularly horticulture, resilient diaspora remittances, and higher receipts from tourism and transport services. Lower food imports also contributed to the narrower trade balance,” said CBK in its latest weekly bulletin.
In the last Monetary Policy Committee briefing held end of May, CBK had attributed the growth in horticulture export earnings to increased acreage under cultivation, better internal surveillance (hence lower losses), improved market access for crops such as avocado and access to new markets such as China.
In the 12-months to April, horticulture earnings stood at Sh107.6 billion ($1.046 billion), up by Sh11.2 billion ($109 million) or 11.6 percent compared to the 12-month period to April 2018.
Tourism earnings rose to Sh106.7 billion in the 12-months to April 2019 compared to Sh101.4 billion in similar period in 2018.
Horticulture export and tourism earnings for May 2019 are yet to be announced.
The growth in the two categories has partly covered for the slower growth in diaspora remittances this year compared to the rapid increase last year.
CBK projects that the current account deficit will stand at 4.8 percent by the end of the year.