Kenya: GDP records slowest expansion in one year in Q4 2023
The economy lost steam at the tail end of 2023, expanding 5.1% year on year in the fourth quarter (Q3 2023: +6.0% yoy) and marking the weakest increase in a year. Despite Q4’s slowdown, economic growth accelerated to 5.6% overall in 2023 (2022: +4.9%), in line with both government and Central Bank estimates; favorable weather drove a rebound in the agriculture sector, which accounted for nearly 22% of GDP and a third of total employment last year.
On the production front, the industrial sector was the principal drag on growth in Q4. Manufacturing output growth dipped to 1.7% (Q3: +2.7% yoy), and electricity and water supply growth fell to 1.3% from 3.3% in the prior quarter. In addition, mining and quarrying contracted 6.9% (Q3: +0.8% yoy). In the tertiary sector, accommodation and food services growth fell to a five-quarter low of 18.1% (Q3: +34.5% yoy), and financial and insurance services growth more than halved to 6.3% from 15.5% in Q3. That said, agricultural output limited the downturn, expanding 6.2% year on year (Q3: +5.1% yoy).
Analysts at the EIU commented:
“The crucial farming sector will remain buoyant [in 2024], underpinned by an El Niño weather system, which typically brings higher rainfall to East Africa. Heavy floods in April are causing disruption and damage, but the net impact will be neutral. Growth will be constrained, however, by the combined impact of domestic fiscal and monetary tightening and a second year of weak global conditions. […] Global constraints range from fragile growth in China to tight US monetary policy and ongoing market disruptions linked to the Russia-Ukraine war.”