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Economic growth slows to 5.2pc on drought, pre-poll jitters – Business Daily

Turkana Governor Jeremiah Lomorukai kicking off relief food distribution programme for Turkana East Sub County at Lotiman village on October 9, 2022. PHOTO | SAMMY LUTTA | NMG
Kenya’s economic growth slowed for the fourth consecutive quarter on the back of below-average rainfall, high inflationary pressures and pre-election jitters, the statistics agency said Tuesday.
The Kenya National Bureau of Statistics (KNBS) reported gross domestic product (GDP) expanded 5.2 percent in the second quarter, a softer pace than 11 percent in a similar period last year.
The growth in the GDP — a measure of national economic output — was also slower than 6.8 percent in the first quarter of this year, 7.4 percent (fourth quarter of 2021) and 9.3 percent (third quarter of 2021).
Prolonged dry weather conditions hurt agricultural production, the country’s mainstay economic activity, the KNBS reported, while higher inflation eroded consumers’ purchasing power and reduced demand for goods and services.
Farming activities — which account for more than a fifth of Kenya’s GDP— slid 2.1 percent, a deeper contraction than 0.5 percent in a similar quarter the year before.
“Agriculture, forestry and fishing activities’ value added contracted for the third consecutive quarters, mainly attributed to unfavourable weather conditions that characterised the last quarter of 2021 and the first half of 2022,” the State statistics body wrote in the quarterly GDP report last evening.
“The performance of the sector was evident in the significant decline in exports of vegetable and cut flowers, and production of tea, coffee and milk.”
The expansion in economic activity was further dragged by inflation, which averaged 7.16 percent in the quarter compared with 5.98 percent a year earlier.
This was majorly driven by increased cost of food and fuel which followed the Russian invasion of Ukraine, exacerbating disruptions in global supply chains that were yet to recover from Covid-19 lockdowns.
The shilling also depreciated 7.9 percent against the US dollar in the review period to exchange at an average of 116.33 units, according to the KNBS, further raising prices in a net import economy.
Growth in the manufacturing sector, which had complained of unrelenting global supply chain disruptions and difficulties accessing adequate dollars to pay suppliers abroad, slowed to 3.6 percent from 11.3 percent in the same quarter last year.
KNBS said growth for manufacturing was largely supported by increased production of meat, fish, bakery products, cement and assembly of motor vehicles, but pulled down by dairy products and edible oils.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.