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Recently, smaller African economies have led the continent in terms of faster economic growth, leaving regional giants like Nigeria and South Africa on the sidelines. Earlier, the Kenya National Bureau of Statistics published Q2-19 GDP figures, posting a y/y GDP growth of 5.4%, down from 6.4% y/y in Q2-18. A broad analysis showed a slowdown in manufacturing, agriculture, electricity and transportation sectors, while finance, construction, ICT and accommodation sectors recorded impressive growth.
Explaining the slowdown, Kenya’s major economic engine, Agriculture, grew at a slower pace, rising 4.1% y/y compared to 6.5% in Q2-18. However, this was due to a delay in long rains which affected the harvest season and limited agricultural production.
Additionally, total exports for the period were affected, down by 7.8% y/y, as lower exports were recorded in Tea and Horticulture, which constituted about 42.8% of export earnings.
Although Q2-19’s growth rate declined, Kenya’s 5-year average annual growth rate currently stands at 5.6%, presenting a case study for other African economies. From multiple indications, Kenya’s tactics bother around pushing investments in its core export earner, by promoting foreign investment and the use of technology in the agricultural space. Looking ahead into FY-19 figures, Kenya is well-positioned to deliver a growth rate between 5.5% to 6.0%, given the effect of the expected short rain on agriculture in Q4-19. Additionally, with the renewed focus on exploring its new oil resources, oil production is expected to kick off in the medium term, with likely positive impacts on government revenue and export diversification.
United Capital Plc Research