Quarterly Gross Domestic Product Report Second Quarter 2017

Real Quarterly Gross Domestic Product (QGDP) is estimated to have slowed down to 5.0 per cent in the second quarter of 2017 compared to 6.3 per cent in the corresponding quarter of 2016. The quarter in review was characterized by sharp increases in food prices as a result of adverse weather conditions and a notable rise in international oil prices. This led to a surge in inflationary pressures with the average inflation rate increasing more than two-fold from 5.36 per cent in the second quarter of 2016 to 10.80 per cent in the review quarter. The current account deficit widened to KSh 134.8 billion in the quarter under review from a deficit of KSh 114.1 billion in the corresponding quarter of 2016 on account of significant increase in the value of imports.

The slowed but robust growth was supported by activities of Transport and Storage, Real Estate, Information and Communication Technology, Accommodation and Food services and a slightly improved growth in Wholesale and Retail Trade. On the other hand, the growth was somewhat constrained by subdued performances in Agriculture Forestry and Fishing (1.4 per cent), Manufacturing (2.3 per cent), Electricity (6.1 per cent) and Financial intermediation (4.3 per cent) thereby dampened the overall growth momentum during the quarter in review.

Performance of the agriculture sector was exacerbated by widespread drought experienced during the fourth quarter of 2016 and somewhat suppressed long rains in 2017 that considerably affected crop production and rearing of animals. This led to a notable slowdown in the manufacture of food as agro-processing was negatively affected by constrained supply of food products. Electricity generation was also greatly affected by reduced rains thereby necessitating increased use of thermal sources whose intermediate inputs are more expensive compared to other sources. Growth in Financial Intermediation was also dampened by the effect of continued slow uptake of credit.

During the quarter, the Kenyan Shilling marginally depreciated against the US dollar but appreciated slightly against the sterling pound. Performance of the Shilling against the Euro and the Japanese Yen remained largely unchanged during the quarter. In the regional front, the Shilling depreciated against the South African Rand and Tanzanian Shilling but appreciated slightly against the Ugandan Shilling. Commercial bank lending rates dropped from an average of 18.15 per cent in the second quarter of 2016 to 13.63 per cent in the quarter under review. 

 

Quarterly Balance of Payments Second Quarter 2017

In the second quarter of 2017, Imports valued on f.o.b increased by 15.5 per cent to KSh 410.9 billion from KSh 355.9 billion in the second quarter of 2016, mainly on account of increased bill on imports of food and petroleum products. On the other hand, exports increased by 2.9 per cent to KSh 150.2 billion in the same period. This resulted into widening of the merchandise trade deficit by 24.2 per cent to KSh 260.8 billion. Receipts from international trade in services expanded by 20.1 per cent to KSh 128.1 billion in the second quarter of 2017 mainly supported by increased travel receipts which grew by 38.0 per cent to KSh 23.5 billion. These developments resulted into 6.4 per cent growth in international trade in services inflows to register a surplus of KSh 38.9 billion in the quarter under review compared to a surplus of KSh 36.5 billion in the corresponding quarter of 2016. In the second quarter of 2017, diaspora remittances remained resilient increasing by 5.1 per cent to KSh 47.6 billion from KSh 45.3 billion in the second quarter of 2016. The surplus in the services account could not offset the deficit in merchandise trade balance leading into an expansion of 18.1 per cent in the current account deficit to KSh 134.8 billion in the quarter under review.

Net financial inflows declined marginally to a surplus of KSh 133.4 billion in the second quarter of 2017 from KSh 134.1 billion in the second quarter of 2016. Gross official reserves increased by KSh 20.8 billion to stand at KSh 889.7 billion as at the end of the second quarter of 2017 compared to an increase of KSh 46.5 billion in the second quarter of 2016.

CPI and rates of inflation for September 2017

In line with the Kenya National Bureau of Statistics commitment to release data for the monthly Consumer Price Indices (CPI) and rates of inflation, we hereby release the numbers for September, 2017. These numbers were generated by conducting a survey of retail prices for a basket of goods and services, during the second and third weeks of the month under review. The prices were obtained from selected retail outlets in 25 data collection zones spread across Nairobi and 13 other urban centers.

The CPI decreased by 0.57 per cent from 184.72 in August to 183.66 in September 2017. The overall year on year inflation stood at 7.06 per cent in September 2017.

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