NAIROBI, Kenya, Dec 30- Kenya’s economy expanded by 5.5 percent during the third quarter of 2014 which is lower than 6.2 percent recorded in the same period of 2013.
The growth was dragged by the accommodation and restaurants service sector whose activity recorded a 14.6 percent decline compared to a contraction of 3.9 percent during the same quarter of 2013.
The reduction is attributable to both internal and external factors including insecurity concerns, negative travel advisories by some key tourist source countries and the perceived health risks in Kenya due to the country’s geopolitical location and connectivity with West Africa.
“All the sectors of the economy recorded positive growths except accommodation and food services (hotels and restaurants) which has consistently been on the decline since last year,” Kenya National Bureau of Statistic (KNBS) said in its quarterly review.
The economy was however supported by strong expansions of activities in construction, finance and insurance, wholesale and retail trade, information and communication and agriculture and forestry.
KNBS says during the quarter, most of the macroeconomic indicators remained relatively stable with the Kenya Shilling exchanging at an average of 88.3 against the US dollar compared to Sh 87.3 recorded in 2013.
Similarly, the Shilling was stable against the Euro, Uganda and Tanzania Shillings but appreciated significantly against the Yen and South African Rand.
During the quarter under review, inflation averaged at 7.54 per cent, which was slightly higher than the Central Bank’s target of between 2.5 to 7.5 per cent, in comparison to an average of 6.99 per cent during a similar quarter last year.
“The rise in inflation was mainly on account of increase in prices of food and beverage and transport costs in the months of July and August. However, inflation eased downwards during the month of September.”
The Central Bank Rate (CBR) was maintained at 8.50 per cent throughout the third quarter of 2014.