NAIROBI, Kenya, Mar 4 – The impact of coronavirus is hurting Kenya’s private sector with a Stanbic Bank report released Wednesday indicating that orders for new goods dropped further in February for the first time in more than two years.
According to the Purchasing Managers’ Index, private sector firms faced a shortage of raw materials owing to reduced imports from China due to the virus outbreak over the past month.
Jibran Qureishi, regional economist for East Africa at Stanbic Bank said the shortage has pushed output prices upwards, as alternative import markets are not as cheap as China.
“Unfortunately, it is difficult to assert whether we are at the beginning, middle or end with the coronavirus due to scant and inadequate data points. A scenario where the virus is contained in the next couple of months is probably the best case,” he said.
“However, if there is an escalation into new geographies with the disruption potentially extending into the third quarter of 2020, the likelihood of a global recession then increases,” he added.
During the period under review, firms reportedly also lost sales due to a lack of money held by domestic customers, amid ongoing cash flow issues in the economy.
Foreign sales meanwhile rose at a much softer pace, which panelists sometimes linked to weaker exchange rates.
This variation in activity hence pushed the Purchasing Managers’ Index down to 49.0 in February, compared to January’s 49.7. Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.