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Kenya’s economic growth slows in Q3

BUDGET-CASENAIROBI, Kenya, Dec 23- Kenya’s economy grew by 4.4 percent between June and September which is slightly lower than 4.5 percent recorded in the last quarter of 2012.

According to the Kenya National Bureau of Statistics (KNBS), there was a slowdown in the growth of agriculture and forestry sector which impacted negatively on the economic performance.

However there was improved performances in financial intermediation, transport and communication, wholesale and retail trade, manufacturing, construction and mining and quarrying activities.

Seasonally adjusted growth, which tracks performance in consecutive quarters indicate that the third quarter grew by 1.6 percent compared to a growth of 0.8 percent in second quarter of this year.

Inflation edged upward to an average of 6.99 percent in the third quarter of 2013 from an average of 6.38 percent experienced during the same period of 2012.

The higher inflation rate was mainly influenced by the implementation of the VAT Act 2013 which led to a rise in prices of a number of commodities in September 2013.

“Financial Intermediation has maintained a strong growth since the second quarter of 2012 except a slowdown experienced in the first quarter of 2013,”KNBS said in its quarterly updates on Kenya’s economy.

The agriculture and forestry sector expanded by 3.4 percent compared to 5.8 percent in a similar quarter of 2012, supported by increased production in tea, vegetables and sugar cane.

Transport and Communication grew by 5.3 percent during the third quarter of 2013 compared to a 3.1 percent growth during the same quarter last year, due to a robust expansion in the communication subsector.

Meanwhile, the Hotels and Restaurants sector growth slowed to 1.3 percent during the third quarter of 2013 from 2.1 percent in the same quarter of 2012.

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“This slow growth was primarily on account of terrorism threats and a decline in the economic fortunes of major tourists sources among them the USA and European countries,” said the report.

In the money market, the Kenya Shilling recorded mixed performances during the review period. The most noticeable was a significant weakening of the Shilling against the Euro while at the same time posting a strong strengthening against the Yen.

Main macroeconomic indicators remained largely stable during the review period.

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