According to data from the Kenya National Bureau of Statistics (KNBS), the gross domestic product (GDP) for the second quarter of 2018 rose by 6.3 per cent compared to 4.7 per cent in the same quarter last year. The growth, which is the highest Q2 since 2013 was attributed to a relatively stable macroeconomic environment and favourable weather conditions.
During the second quarter, sectors that recorded growth include agriculture, and electricity and water supply with improvements of 5.6 per cent and 8.6 per cent respectively compared to 0.8 per cent and 6.0 per cent.
Inflation Rate
During the quarter, the inflation rate reduced to average at 3.98 per cent compared to 10.8 per cent in the second quarter of 2017. The rate of inflation was attributed to food and non-alcoholic beverages prices that remained unchanged.
The report also indicates that there was a significant rise in fuel and transportation prices thanks to the surge in international oil prices.
“The increase in fuel prices was mainly on account of a 45.2 per cent rise in the international crude oil prices during the quarter under review compared to the same period in 2017,” the report states.
In addition, the report notes that the Kenyan Shilling recorded a mixed performance against major trading currencies such as US dollar, Japanese Yen, the Ugandan Shilling, and the Tanzanian Shilling. However, the Kenyan Shilling lost to the Euro, the South African Rand, and the Pound Sterling.
The Central Bank Rate and NSE Performance
The Central Bank Rate (CBR) remained at 9.5 per cent during the quarter compared to 10.0 per cent during the same quarter last year, indicating an improvement in the cost of borrowing.
In addition, weighted interest rates on commercial bank loans and advances reduced from an average of 13.24 per cent in the second quarter of 2017 to 13.62 per cent in the second quarter of 2018. The report also observes that the activities at the Nairobi Securities Exchange (NSE) have stayed suppressed over the last three years.
“The NSE 20 share index as at the end of the second quarter of 2018 dropped by 8.9 per cent to stand at 3,286 points from 3,607 as at the end the second quarter of 2017,” highlights the report.
