Kenya’s economic growth has slowed for the fifth quarter in a row, owing to below-average rainfall, elevated inflationary pressures, and the August election.
According to the Kenya National Bureau of Statistics, economic activity expanded by nearly half a percentage point to 4.7 percent in the third quarter that ended September, down from 9.3 percent in the same period last year.
Gross domestic product (GDP) growth was also slower in the review period than 5.2 percent in the second quarter of this year, 6.8 percent in the first quarter of 2022, 7.4 percent in the fourth quarter of 2021, and 9.3 percent in the fourth quarter of 2021. (in the third quarter of 2021).
Prolonged dry weather conditions and high cost of inputs hurt agricultural production, the country’s mainstay economic activity, the KNBS reported, while runaway inflation and weaker shilling eroded consumer purchasing power and reduced demand for goods and services.
Farming activities — which account for more than a fifth of Kenya’s GDP— contracted 0.6 percent compared with a marginal growth of 0.6 percent in a similar period in 2021.
“The slowdown in the performance of the sector was mainly attributed to unfavorable weather conditions that prevailed in the first three quarters of 2022. The decline was reflected in vegetable exports and milk intake by processors that declined by 26.1 percent and 10.7 percent, respectively during the quarter under review,” the state-owned statistician wrote in the quarterly GDP report.
“The sector’s performance was cushioned from a steeper contraction by improved production in fruits, coffee, and cane.”
The expansion in economic activity was further dragged by higher inflation — a gauge for the cost of living over 12 months — averaged 8.7 percent in the July-September compared with 6.7 percent in the corresponding period a year earlier.
The increased cost of food and fuel as a result of Russia’s invasion of Ukraine exacerbated disruptions in global supply chains that had yet to recover from Covid-19 lockdowns.
To manage expectations of a further rise in the cost of the living measure, the Central Bank of Kenya raised benchmark interest rates to 8.25 percent in the last month of the quarter from 7.5 percent.
