Kenya’s economy is expected to remain resilient in 2024 after a 5.6 per cent expansion last year from a revised growth of 4.9 per cent in 2022.
- The annual Economic Survey by the Kenya National Bureau of Statistics (KNBS) says the resilience in 2024 will mainly be supported by a robust services sector, strong performance in agriculture aided by anticipated adequate rainfall, and a decline in global commodity prices that is expected to reduce the cost of production.
- In 2023, agriculture remained the dominant sector, representing 21.8 per cent of the total GDP.
- Combined, service activities contributed 61.3 per cent of the GDP while industry-related activities comprised 16.9 per cent of the GDP in 2023.
“The outlook for the domestic economy may be hampered by risks related to unpredictable weather conditions occasioned by climate change which could adversely affect agricultural production and result in domestic inflationary pressures,” warns the survey
“The tight fiscal stance being pursued by Government may also lead to tight liquidity affecting aggregate demand. Externally, escalation of geopolitical tensions particularly the Israel-Palestinian, Israel-Iran and Russia-Ukraine conflicts could result in higher commodity prices which would pose a risk to domestic inflation outcomes,” reports the survey.
Other key drivers of the growth in 2023 included Information and Communication (9.3 per cent), Transportation and Storage (6.2 per cent), Financial and Insurance (10.1 per cent), Real Estate (7.3 per cent) and Accommodation and Food service activities (33.6 per cent) sectors.
However, the Mining and Quarrying sector recorded a 6.5 per cent contraction, largely attributable to a decline in production of most of the minerals such as titanium and soda ash.
“Nominal GDP grew by 12.0 per cent reaching KSh 15,108.8 billion in 2023, from KSh 13,489.6 billion in 2022. Gross National Disposable Income increased to KSh 15,882.5 billion in 2023 from KSh 14,051.0 billion in 2022.”
During the review period, the Central Bank Rate (CBR) was raised to 10.50 per cent as at June 2023, and 12.50 per cent as at December 2023 compared to 8.75 in December 2022.
This was necessitated by the need to address inflationary pressures occasioned by depreciation of the Kenyan Shilling against major currencies and high global prices during the review period. As a result, overall interest rates increased during the review period. The 91-Day Treasury bill interest rate increased to 15.70 per cent in December 2023 from 9.33 per cent in December 2022.
The Inter-bank rate rose to 11.65 per cent in December 2023 from 5.39 per cent. Average commercial banks interest rate for loans and advances increased to 14.63 per cent in December 2023 from 12.67 per cent as at December 2022.
Manufacturing Sector
Manufacturing sector grew by 2.0 per cent in the year under review compared to a growth of 2.6 per cent recorded in 2022. The share of the sector to GDP was 7.6 per cent in 2023.
The volume of output grew by 2.8 per cent in 2023 compared to a growth of 3.7 per cent in the previous year. The highest growth in volume of output was recorded in agro processing subsectors: Prepared Animal Feeds (17.0 per cent), Dairy Products (16.4 per cent), Prepared and Preserved Fruits and Vegetables (11.6 per cent) and Meat and Meat Products (10.1 per cent).
The non-food subsectors that recorded growths included Leather and Related Products; Plastic Product; and Fabricated Metal Products except machinery and equipment at 21.7, 16.2 and 15.3 per cent respectively, in 2023.
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