Kenyan Economy Expanded by 6.2 Percent During the Second Quarter

Data from Kenya National Bureau of Statistics have indicated that the economy experienced a relatively conducive environment for growth during the second quarter of 2016 with all the economic sectors recording positive growths at varied magnitudes.

The economy is estimated to have grown by 6.2 percent during the second quarter of 2016 compared to 5.9 percent during the same quarter in the year 2015 supported by better performances in the activities of; agriculture, forestry and fishing; transportation and storage; real estate; and wholesale and retail trade.

The manufacturing sector experienced the slowest growth at 3.2 percent during the review quarter while accommodation and food services continued with the recovery that started in the fourth quarter of 2015 to expand by 15.3 percent over the same period.

The Mining and quarrying sector; electricity and water supply; and information and communication sectors recorded notable improvements in their growths during the review quarter.

Activities of the construction and financial and insurance sectors slowed down but maintained robust growths during the review period. The review quarter experienced a relatively stable macroeconomic environment despite a remarkable rise in interest rates.

Inflation edged downwards significantly to average at 5.6 percent during the review period compared to 7.0 percent in the same quarter of 2015. The slowdown in inflation was mainly due to the near stagnation of costs of transportation during the review quarter.

Slowdowns in the rise of consumer prices for housing, water, energy and communication services also contributed to the deceleration in inflation. Interest on commercial bank loans rose significantly to an average of 18.15 percent during the second quarter of 2016 compared to 15.57 percent in the same quarter of 2015.

This rise was despite the downward revision of Central Bank Rate (CBR) from 11.5 percent that was in place since June 2015, to 10.5 percent towards the end of May 2016. The Kenyan Shilling strengthened against the main trading regional currencies (South Africa Rand, Ugandan Shilling and Tanzanian Shilling) but depreciated against the major world currencies (US dollar, the Euro and Japanese Yen) in the review quarter.

Measured against the same quarter of 2015, the current account deficit recorded an improvement of 6.1 per cent to stand at 141.9 billion shillings in the quarter under review. This was mainly due to a rise in exports against a contraction of imports.

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