The Kenyan economy has been hit hard by the sweeping Covid-19 pandemic. Businesses shut down and people lost their jobs. At least 2 million Kenyans are said to have lost their jobs and a similar number was driven into abject poverty.
According to stats compiled by Cytonn Investments, during the first half of the year the economy contracted by 0.4% due to the 5.7 percent contraction in Q2’2020 down from a growth of 5.3 percent recorded in a similar period in 2019.
The contraction was largely driven by the 83.3 percent decline in the accommodation and food sector following the closure of most facilities and also the reduction in tourist arrivals into the country.
Some of the other sectors like agriculture helped cushion the economy from further decline. This is the first contraction since the third quarter of 2001 when the country recorded a 2.5percent contraction.
“Considering the recent easing of some of the restrictions and reopening of some of the sectors we expect the economy to slightly rebound and this is already reflected by the improvement in PMI where we’ve seen readings as high as 59.1 in October 2020, pointing to an improvement in the Kenya private sector outlook,” said Cytonn.
The IMF October Report: A long and difficult ascent also expects the Kenyan Economy to grow by 1.0 percent an improvement from the June projections of a (1.0 percent) growth but the economy should recover to grow at 4.7 percent in 2021. Notably, H1’2020 average GDP growth now stands at 1.0 percent.
Kenya’s economy is expected to rebound as the year 2021 kicks off but analysts are scared that the new strain of Covid-19 might lead to countries going under lockdown one again, hence affecting businesses around the world.
The move by President Uhuru Kenyatta to extend the curfew has also been criticized saying it will cripple the economy even further.