On Wednesday, the Kenya National Bureau of Statistics (KNBS) released a report indicating that Kenya’s economy grew at a slower pace of five percent in the first three months of 2024, down from 5.5 percent in the corresponding period last year, amidst a challenging business environment characterized by high interest rates.
KNBS stated that except for finance and insurance activities, all sectors saw reduced growth in the first quarter of 2024 compared to the same period in 2023, reflecting broader macroeconomic difficulties.
Agriculture, which contributes over a fifth to Kenya’s GDP, continued its recovery despite challenges such as declining exports of coffee, fruit, and cut flowers.
“Agriculture expanded by 6.1 percent in the first quarter of 2024, slightly lower than the 6.4 percent recorded in the same period in 2023,” KNBS highlighted.
“Similar to the first quarter of 2023, agricultural production was vibrant in the corresponding quarter of 2024, owing to favourable weather conditions that supported crop and animal production during the quarter,” KNBS reported.
The sector benefited from favourable weather conditions that supported robust crop and animal production during the quarter.
Conversely, manufacturing, a key sector for employment, grew by 1.3 percent in the first quarter of 2024, down from 1.7 percent in the previous year’s first quarter. Construction activities also slowed significantly, expanding by only 0.1 percent compared to three percent in the same period last year. Reduced cement consumption signaled a decline in public infrastructure projects.
Accommodation and electricity sectors also faced slower growth during the review period, coinciding with an uptick in interest rates initiated by the Central Bank of Kenya (CBK) to combat rising consumer prices.
In contrast, the finance and insurance sector showed resilience, posting a growth rate of seven percent in the first quarter of 2024, up from 5.9 percent in 2023. This uptick reflected increased earnings for banks amidst higher interest rates.
Looking at the broader economic picture, Kenya’s GDP expanded by 5.6 percent in 2023, up from a revised figure of 4.9 percent in 2022. A recovery in agricultural activities underpinned the growth despite the varied performance across other sectors amid the prevailing economic challenges.
