Kenya’s economic growth slowed down to 4.9% in the first quarter of this year, from 5.5% growth posted in the first quarter of 2019.
CBK warns that the adverse effects of COVID-19 on the economy will be more pronounced in Q2, 2020.
Figures from the Kenya National Bureau of Statistics indicate that the agricultural sector grew at 4.9%, an improvement from 4.7% growth rate in the first quarter of 2019.
The industrial sector, which includes mining and quarrying, manufacturing, construction as well as electricity and water supply, slowed down to 4.4% in Q1, 2020, from 4.7% in a similar period in 2019.
The growth rate in the services sector declined to 5.5% from 6.4% recorded in the first quarter of 2020. This sector includes wholesale and retail, accommodation and restaurant, transport and storage, ICT, finance and insurance, public administration, professional services, real estate, education, and health.
The Accommodation and Restaurant segment suffered the biggest hit, recording a negative growth rate of 9.3% from 11% growth in Q1, 2019.
Overall inflation declined to 4.6 percent in June from a revised 5.3 percent in May, mainly driven by a general decline in food prices.
Kenya Shilling
The Kenya Shilling remained stable against major international and regional currencies during the week ending July 2. It exchanged at KSh 106.54 against the US dollar on July 2 compared to KSh 106.40 on June 25.
Forex
Foreign Exchange Reserves stood at US$ 9,717 Million as at July 2. This meets the CBK’s statutory requirement of at least 4 months of import cover and the EAC region’s convergence criteria of 4.5 months of import cover.
Current Account deficit narrowed to 5.2 percent of GDP in the 12 months to May 2020 compared to 5.6 percent of GDP in the 12 months to April. This was supported by the reduced price of oil imports, improvement in exports of tea and horticulture, as well as increased diaspora remittances.
The Treasury bills auction of July 2 received bids totalling KSh 76.2 Billion against an advertised amount of KSh 24.0 Billion, representing a performance of 317.4 %.
Turnover of bonds traded in the domestic secondary market declined by 30.9 percent during the week ending July 2, 2020.
International market
Yields on Kenya’s Eurobonds remained stable, declining by an average of 0.34 basis points.
Global financial markets sentiment improved towards the end of the week following positive news on the COVID-19 vaccine front, expectations of continued policy support, and better than expected economic data for some major economies.
International oil prices increased during the week on account of lower oil production by OPEC countries. Murban oil price increased to US$ 42.91 per barrel on July 2 from US$ 40.83 per barrel on June 25, 2020
