GDP per capita in Kenya

Kenya - GDP per capita (U.S. Dollars)

GDP growth hits over decade-high in Q2

According to a recent release by Kenya’s Statistical Institute, GDP growth jumped to 10.1% in annual terms in the second quarter, accelerating from the prior quarter’s 0.8% expansion. Q2’s result marked the strongest expansion in over a decade but was flattered by a low base effect.

Looking at the details of the release, growth accelerated in the mining and quarrying sector (Q2: +14.9% yoy; Q1: +11.3% yoy), in the information and communication sector (Q2: +25.2% yoy; Q1: +16.1% yoy), in the financial and insurance sector (Q2: +10.0% yoy; Q1: +9.4% yoy), in the education sector (Q2: +67.6% yoy; Q1: +10.0% yoy), in the wholesale and retail trade sector (Q2: +9.5% yoy; Q1: +7.4% yoy) and in the manufacturing sector (Q2: +9.6% yoy; Q1: 1.5% yoy). Meanwhile, activity in the accommodation and restaurant sector bounced back in Q2, growing 9.1% and contrasting the prior quarter’s 48.8% slump. Less positively, output in the construction sector grew at a softer rate (Q2: +6.5% yoy; Q1: +7.9% yoy), while production in the agricultural sector dropped at a quicker rate of 1.0% (Q1: -0.1% yoy).

Meanwhile, GDP expanded 2.0% in seasonally-adjusted quarter-on-quarter terms in Q2, accelerating from the prior quarter’s 1.5% expansion.

Commenting on the growth outlook, analysts at the EIU said:

“Growth in 2021 will be lower than the long-term trend (of 5.0% a year in 2010–19 according to rebased GDP figures in September), constrained by a weaker performance in agriculture, owing to drier weather—and lower prices for key cash-crop exports—alongside the enduring pandemic impact on vulnerable sectors such as tourism. Tighter fiscal policy, including tax hikes, will also weigh on growth in 2021, although monetary policy will remain accommodative. We expect growth to quicken to 4.3% in 2022, helped by a partial recovery in tourism, provided that the Covid-19 pandemic continues fading, although the emergence of new viral variants is a key risk.”

Commenting on the growth outlook, analysts at the EIU said:

“Growth in 2021 will be lower than the long-term trend (of 5.0% a year in 2010–19 according to rebased GDP figures in September), constrained by a weaker performance in agriculture, owing to drier weather—and lower prices for key cash-crop exports—alongside the enduring pandemic impact on vulnerable sectors such as tourism. Tighter fiscal policy, including tax hikes, will also weigh on growth in 2021, although monetary policy will remain accommodative. We expect growth to quicken to 4.3% in 2022, helped by a partial recovery in tourism, provided that the Covid-19 pandemic continues fading, although the emergence of new viral variants is a key risk.”

FocusEconomics Consensus Forecast panelists see GDP growth at 5.4% in 2022, which is unchanged from last month’s estimate. Panelists forecast GDP growth to accelerate to 5.2% in 2023.