Growth of Kenya’s economy in 2020, like most economies all over the world, will largely be depend on how it manages to cushion life and economic activities from disruptions posed by the COVID-19 pandemic.
According to a quarterly Economic Survey 2020, a bulletin published by the Kenya National Bureau of Statistics (KNBS), most economic activities have so far been slowed down by night curfews and restrictions in and out of Nairobi and Mombasa, two of Kenya’s biggest cities.
The Survey warns that a weak global economy is also likely to negatively impact on Kenya’s economy, more so horticultural exports and the tourism sector.
The Statistics Office said that while the onset of long rains has been timely and well spread-thus a boon for the agriculture sector, growth in horticulture sub-sector is expected to be hit by the pandemic as foreign buyers of flowers and fresh produce from Kenya, cut back on their orders.
Night curfews has affected firms engaged in transport, education, accommodation and food industry.
Firms in the manufacturing, construction, wholesale and retail trade, public administration and defence, mining and quarrying, have also not been spared. Banks and insurance firms, as well as other financial services providers, are also experiencing slowed demand due to weakening economic activities and declining disposable incomes.
During the first quarter of 2020, inflation was significantly higher compared to a similar quarter of 2019 on account of higher food and beverage prices.
The Survey projects that this scenario is likely to be replicated for some of the remaining months, leading to edging upwards of inflation in 2020 but remain well within the Central Bank of Kenya’s target.
Fall in oil prices and a reduction in Value Added Tax (VAT) rate are likely to be supportive of low inflation as well as cushion the consumers from rising cost of living to a certain extent.
This Quarterly report says a weakening of Kenya Shilling against the US Dollar is likely to result to rise in prices of imports and somehow contribute to the rise in inflation.
The Government is expected to use all available fiscal and monetary policy measures and tools to re-orient expenditure to initiatives that aim to control and eventual elimination the pandemic, significantly affected the economy’s growth.
KNBS figures show that Kenya’s economy is estimated to have expanded by 5.4 per cent in 2019 compared to a growth of 6.3 per cent in 2018. The growth was spread across all sectors of the economy but was more pronounced in service-oriented sectors.
Agriculture, Forestry and Fishing sector accounted for a sizable proportion of the slowdown of Kenya’s economy, from 6.0 per cent growth in 2018 to 3.6 per cent in 2019. This was due to low rains that disrupted the normal planting season in key agricultural zones.
Similarly, the manufacturing sector grew by 3.2 per cent in 2019 compared to 4.3 per cent growth in 2018, partly owing to a constrained supply of raw materials from agricultural activities.
Performance in service activities was boosted by accelerated growths in Financial and Insurance (6.6 per cent) and Real Estate activities (5.3 per cent).
Construction activities continued to be an important sector in the economy despite recording a slower growth for the fourth year running. The gross value added for the construction sector was estimated to have risen by 6.4 per cent in 2019 compared to 6.9 per cent in 2018.
The decelerated growth recorded over the years was attributable to the gradual cessation of activities related to the construction of the Standard Gauge Railway (SGR)that was completed in the year under review.
Consumption of cement declined marginally from 5,948.7 thousand tonnes to 5,933.3 thousand tonnes in 2018 and 2019, respectively.
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