Kenya’s current account deficit widened by 9.7 per cent in the second quarter of this year compared to a similar period last year on higher fuel and merchandise import costs.
Latest data from the Kenya National Bureau of Statistics (KNBS) shows the country’s trade deficit increased to Sh174.4 billion between April to June 2022, from Sh158 billion in the same period last year.
An increase in the trade gap on merchandise rose to Sh365.6 billion from Sh239.11 billion during the period.
“The marked increase in merchandise trade deficit was mainly occasioned by a 31.7 per cent growth in imports on f.o.b basis to Sh594.3 billion, compared to a 27.4 per cent increase in exports to Sh228.7 billion. Elevated oil prices increased the import value of petroleum products, thereby pushing the import bill during the second quarter of 2022,” KNBS added in the report.
Since 2021, oil prices have been rising in Kenya, attributed to the ongoing Russia-Ukraine war as well as a rise in global demand on Covid-19 recovery that has impacted the supply chain.
For instance, in Nairobi, a litre of petrol rose from Sh107.66 in April 2021 to Sh179 in October 2022. The current account records a country’s earnings and spending on imports and exports.
A rise in remittances has failed to narrow the deficit; however, according to the Central Bank of Kenya (CBK) showed that Kenyans living abroad sent home Sh42.05 billion in March 2022, a 15.5 per cent growth compared to the Sh36.7 billion sent in February.
Read also; Current Account Deficit Narrows to 5.1%-CBK.
