Business activity in Kenya improved in June mainly due to the change in curfew hours and the relaxation of lockdown in key European cities. The easing of restrictions in Europe triggered demand for flowers and horticulture exports from Kenya and helped push up the level of activity in the private sector.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) stood at 46.6 in June, 2020 rebounding from May’s 36.7 but staying below the 50 mark separating expansion from contraction.
This reading points to the weakest contraction in Kenya’s private sector activity in four months. Export orders grew for the first time since February 2020, as trade with Europe strengthened.
As a result, declines in employment and purchasing activity eased. On the price front, input costs decreased for a second straight month, due to salary cuts, leading to back-to-back falls in overall input costs for the first time in the series history.
Selling prices dropped at a solid pace, but less than in May 2020.
The International Monetary Fund(IMF) has warned that the impact of the global pandemic on Kenya’s economy will be severe. These include significant fiscal and external financing needs as authorities channel resources to stem the spread of coronavirus disease.
“A resumption in cargo flights in addition to the gradual re-opening of economies around the world, is underpinning external demand,” said Jibran Qureishi, the Head of Research for Africa at Stanbic Bank.
“However, the damage done by COVID-19 could last for the better part of the next six months, notwithstanding what official growth statistics may indicate,” said Qureishi.
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