Report shows businesses upbeat on economy

May 5, 2015
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According to Standard Chartered Bank Kenya's Business Sentiment Indicator (BSI), the index rose from 60.6 in March with most businesses expressing their confidence in the economy despite challenges especially on security/FILE
According to Standard Chartered Bank Kenya’s Business Sentiment Indicator (BSI), the index rose from 60.6 in March with most businesses expressing their confidence in the economy despite challenges especially on security/FILE
NAIROBI, Kenya, May 5- Kenya’s business confidence indicator improved further in April to 66.9 points as local firms continued to report expanded activity and a positive short-term economic outlook.

According to Standard Chartered Bank Kenya’s Business Sentiment Indicator (BSI), the index rose from 60.6 in March with most businesses expressing their confidence in the economy despite challenges especially on security.

“This is the second-highest print since the series began with the highest being 69.1 recorded in December 2014. Domestic demand appears to be growing strongly, with gains in production, new orders and order backlogs in April,” the report shows.

Three components that have largely contributed in making up Kenya’s BSI rise strongly in April included new business orders which went were up 8.4percent, production up by 10.7percent as well as order backlogs which rose by 54.5percent.

Overall business conditions remained roughly flat in April, at 66.1 from 67.8 in March and although both the current conditions and future expectations prints softened slightly, the study shows that they are still well above the 50 level.

Future expectations remained high at 82.2, showing Kenyan businesses were still extremely optimistic about the short-term outlook.

Local investors continued to report greater ease of access to credit, which is likely supporting firms’ ability to increase productive capacity to meet stronger demand, as well as companies’ positive views of their financial positions.

Kenyan businesses reported further improvements in their financial positions in April with the current conditions indicator increasing by 7.1 percent. Future expectations reached a new series high at 92.0, indicating very strong positivity.

“Although the rise in business sentiment was not uniform all but one of the indicators remained above the 50 level indicating economic expansion,” says the review.

However, Kenyan firms reported that the Kenya Shilling was hurting their businesses more in April.

They said the exchange rate has had a negative impact on their businesses and with most of them fearing that they would continue to expect negative effects from the exchange rate in the coming months.

“The current conditions indicator fell to 42.4 in April. The future expectations indicator fell 7.8percent to 44 in April.”

The Standard Chartered BSI for Kenya is a diffusion index, summarising in a single number how optimistic businesses feel about current and future economic conditions.

Each month, up to 200 formal-sector businesses, active in different segments of Kenya’s economy, respond to questions on Kenya’s current and future economic conditions.

Although most of the respondents polled are Nairobi-based, with some in Mombasa, the businesses that they represent are active across Kenya.

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