The Kenyan economy in the first quarter of 2017 advanced by 4.7 percent in annual terms, compared to a 5.9 percent expansion in a similar period last year.
The slowdown in growth was largely due to a 1.1 percent contraction in the activities of agriculture, negatively impacted by drought during the last quarter of 2016 and the first quarter of 2017. A slowdown in credit uptake also slowed economic growth during the period under review. There was a moderate buildup in inflationary pressures mainly due to significant increases in prices of food and beverages during the period under review.
Agriculture sector contracted by 1.1% compared to an expansion of 0.1% in the previous period. The contraction in agriculture was the first since 2011. The service sector, however, held up well. growth accelerated in the hotel & restaurant and wholesale & retail trade sectors.
Output growth slowed for transport and storage (9.9% from 10.4% in Q4 2016), real estate (9.6% from 9.7%), construction (8.4% from 11.5%) and education (5.9% from 6.3%).
Inflation averaged at 8.8 per cent thereby overshooting the Central Bank’s upper limit of 7.5 per cent.
On the other hand, key macroeconomic indicators remained largely stable with interest rates dropping significantly as a result of the capping that became effective in September 2016.
In the money market, the Kenyan Shilling strengthened against most of its major trading currencies. The most notable gain was a 12.1 per cent strengthening against the Pound Sterling. However, the Shilling weakened against the South African Rand, Yen and US Dollar during review period.
Accommodation and food services sectors recorded the highest growth at 15.8 per cent from 10.4 per cent during the first quarter of 2016.
