Kenya’s economic growth dropped to four per cent in the three months to September 2024 even as the reducing inflation and strengthening of the shilling failed to spur consumption.
New data released by Kenya National Bureau of Statistics shows that the economy shrunk by two per cent form six per cent growth reported in a similar period in 2023.
According to KNBS director, Population and Social Statistics Abdulkadir Awes, the decelerated growth was largely due to a general decline in growth in most sectors of the economy.
The growth was constrained by contractions in construction and mining and quarrying activities.
“Construction activities contracted by 2.0 per cent while mining and quarrying posted a contraction of 11.1 per cent in the quarter under review,” said Awes.
Since 2021, the 4 per cent is the lowest recorded Q3 Gross Domestic Product growth post Covid-19. Gross Domestic Product (GDP) is the standard measure of a country’s economic health and is used as an indicator of the living standards of citizens.
In the review period, the growth in agriculture, Transport and real estate was not enough to sustain a positive growth.
Forestry and Fishing grew by 4.2 per cent, Transportation and Storage activities by 5.2 per cent, Financial and Insurance activities by 4.7 percent, Real Estate activities by 5.5 percent, Wholesale and Retail activities by 4.8 percent and Accommodation and Food service activities saw a 13.7 growth.
The drop is however lower than what the International Monetary Fund (IMF) had projected for the Kenyan economy.
The multilateral lender had projected the economy to grow at a slower pace for the next two years.
In its Global Economic Outlook report published on October 22, the Bretton Woods Institution projected the country’s Gross Domestic Product (GDP) to drop from 5.6 to 5.0 in 2024 and retain the same level in 2025, depicting a worrying trend for President William Ruto’s administration.
Ruto’s administration has found itself in a tight spot as the economic indicators fail to reflect the real situation on the ‘ground’.
For instance, the latest data show that the quarter under review registered mixed performance of key macroeconomic indicators, where inflation eased to an average of 4.08 per cent in the third quarter of 2024 from 6.93 per cent in the corresponding quarter of 2023.
This was mainly driven by lower prices of food and non-alcoholic beverages. During the third quarter, the Kenyan Shilling appreciated against all major currencies compared to the corresponding quarter of 2023.
On average, the Kenyan Shilling gained ground against the US Dollar, Euro, and Pound Sterling by 10.1 per cent, 9.3 per cent and 7.7 per cent, respectively.
“Similarly, the Kenya Shilling appreciated against the Tanzania Shilling and Uganda Shilling by 21.2 per cent and 11.7 per cent, respectively. However, the Kenyan Shilling depreciated by 12.7 per cent and 6.7 per cent against the Japanese Yen and the South African Rand respectively,” KNBS said in its Quarterly Gross Domestic Product Report.
The Central Bank Rate (CBR) was reviewed downwards from 13.00 per cent in July to 12.75 per cent in both August and September of 2024 compared to 10.50 per cent for similar months of 2023.
The NSE 20 Share Index rose by 17.8 per cent to 1,775.7 points in September 2024 from 1,508.0 points in September 2023.
Broad money supply grew from Sh5.841.1 trillion at the end of September 2023 to Sh5.992.1 billion at end of September 2024.
The current account balance narrowed from a deficit of Sh139.8 billion in the third quarter of 2023 to a deficit of Sh139.2 billion in the third quarter of 2024.
However, the findings fail to capture the impact of the Gen Z protests that hampered key state revenue-raising measures.
