NET OUTFLOWS

Reduced imports ease Kenya's current account deficit

The deficit narrowed to 4.0 per cent of GDP in the 12 months to August 2019 from 4.2 per cent in July

In Summary

•In August, trade balance declined to Sh83.197 billion from Sh103.37 billion recorded in the previous month and Sh98.32 billion in the similar period recorded last year.

•CBK's data also showed the economy grew by 5.6 per cent in the three months to June, despite delayed onset and below-average long rains which affected agriculture.

Containers at the ort of Mombasa /VICTOR IMBOTO
Containers at the ort of Mombasa /VICTOR IMBOTO

Kenya's current account deficit narrowed to 4.0 per cent in the 12 months to August from 5.0 per cent in a similar period in 2018, due to declining imports.

The deficit measures a country's foreign inflows through investment, transfers and transactions done in the trade of imports and exports.

In August, trade balance declined to Sh83.197 billion from Sh103.37 billion recorded in July and Sh98.32 billion over a similar period rein 2018.

 
 

This was due to declined imports to Sh132.80 billion out of which government imports were recorded at Sh2.645 billion while commercial imports were Sh130.156 billion.

This represents a 13.5 per cent and 11.1 per cent drop compared to Sh153.59 billion of imports declared in July and Sh149.30 billion recorded in August 2018 respectively.

Exports in the month of August were Sh49.604 billion, a slight 1.23 per cent decline from Sh50.22 billion in July.

Over the period, the inflation rate fell to 5.0 per cent in August from 6.3 per cent in July, supporting the price competitiveness of vegetable and non-vegetable food crop exports.

Preliminary data shows that the current account deficit narrowed to 4.0 per cent of GDP in the 12 months to August 2019 from 4.2 per cent in July,"  Central Bank stated.

It said this reflected resilient in  horticulture exports, diaspora remittances, higher receipts from tourism and transport services, and slower growth of imports of food, machinery and transport equipment. 

CBK's data also showed the economy grew by 5.6 per cent in the three months to June, despite delayed onset and below-average long rains which affected agriculture.

This represents a similar growth to the first quarter, but a decline from 6.4 per cent GDP growth in Q2 of 2018.

 

The steadiness in growth was attributed to improved performance in the non-agricultural industry and service sectors which grew by 5.3 per cent and 6.7 per cent from 4.2 per cent and 6.3 per cent respectively.

 

This includes sub-sectors such as mining, manufacturing, electricity and water supply. Only growth in construction declined to 5.6 per cent from 6.1 per cent.

The service sectors included wholesale and retail, accommodation and restaurant service, health, finance and insurance among others.

Growth of the agricultural sector declined to 4.1 per cent over the three months to June, from 5.1 per cent in the first quarter of the year.

Taxes contribution to GDP declined from 5.8 per cent to 4.5 per cent.

CBK estimates the current account deficit to narrow to an average of 4.5 per cent in 2019 from 5.0 per cent in 2018.