Kenya: Economy decelerates in Q1
July 17, 2017
In the first quarter of 2017, GDP expanded 4.7% in annual terms, down from Q4’s 6.1% growth. In seasonally-adjusted quarter-on-quarter terms, GDP expanded 1.8%, up from Q4’s 1.3%.
Q1’s figure was underpinned by a stellar performance in the construction sector, which grew 8.4% year-on-year. The sector was supported by heavy infrastructural development, in particular the construction of the Standard Gauge Railway (SGR) between Mombasa and Nairobi. In contrast, the agricultural sector contracted 1.1% year-on-year in Q1, as the severe drought which has hit the country in recent months affected the production of several staple food crops. The manufacturing sector chalked up a meager 2.9% year-on-year expansion in Q1, due to depressed agro-processing activities.
Looking ahead, growth should pick up as weather conditions return to normal and the agricultural sector recovers; in this sense, recent rains in the country bode well for food production in the months ahead. In addition, fixed investment should bounce back after shrinking last year, although the recent slowdown in private sector credit growth could hamper the extent of the rebound.
Author: Oliver Reynolds, Economist