REBOUND

Kenya's economy grew 10.1% in first six months of the year — KNBS

Reopening of schools and transport sector were leading contributors to the growth

In Summary

• National Treasury CS Ukur Yatani said the reopening of schools and the transport sector were leading contributors to the growth that softened in the first three months of the year.

• Sectors that supported overall growth in the second quarter included Manufacturing (9.6 per cent), Education (67.6 per cent), Transportation and Storage (16.9per cent), Information and Communication (25.2 per cent) and Other Services Activities (20.2 per cent).

National Treasury CS Ukur Yatani.
National Treasury CS Ukur Yatani.
Image: TREASURY

Kenya’s economy rebounded strongly in the second quarter of the financial year, with real GDP growing 10.1 per cent supported eased Covid-19 containment measures.

In his statement upon the release of the much delayed economic data, National Treasury CS Ukur Yatani said the reopening of schools and the transport sector were leading contributors to the growth that softened in the first three months of the year.

“The outlook for 2021 looks encouraging going by this performance. The Bureau is currently working on the 3rd Quarter GDP estimates that will be released soon,’’ Yatani said.

Sectors that supported overall growth in the second quarter included Manufacturing (9.6 per cent), Education (67.6 per cent), Transportation and Storage (16.9per cent), Information and Communication (25.2 per cent) and Other Services Activities (20.2 per cent).

There was a slowdown in the performance of agriculture, forestry and fishing activities in the first and second quarters of 2021.

The sector contracted by 0.9 per cent in the second quarter of 2021 compared to a growth of 4.9 per cent in the corresponding quarter of 2020.

MILK, CANE INCREASE

The sector’s performance was, however, cushioned from a steeper slump by an increase in milk production, horticultural exports and production of sugarcane.

The volume of milk intake by processors increased by 37.9 per cent to stand at 208.5 million litres in the second quarter of 2021.

Cane deliveries increased to 1.9 million metric tonnes in the quarter under review compared to 1.7 million in the corresponding quarter last year.

Volume of vegetables, cut flowers and fruit exports increased by 58.1 per cent, 55.2 per cent and 23.5 per cent, respectively, in the first six months of the year.

The performance of the agricultural sector was further affected by a decline in tea production from 143,037 metric tonnes in the second quarter of 2020 to 133,090 metric tonnes in the corresponding quarter of 2021.

The manufacturing sector’s real GDP grew by 9.6 per cent in the period under review compared to a contraction of 4.7 per cent in the same period of 2020.

The food sub-sector expanded by 6.7 per cent during the review period.

Manufacture of dairy products; bakery products; tobacco products; registered substantial growth.

Production of non-food products rose by 12.2 per cent.

Assembly of motor vehicles grew by 10.0 per cent while the manufacture of galvanized iron sheets and paper grew by 34.5 per cent and 13.5 per cent respectively.

Credit advanced to enterprises in manufacturing activity declined by 0.9 per cent to stand at Sh1.26 trillion.

The performance of the construction sector was relatively slower in the second quarter, recording a relative growth of 6.5 per cent compared to 8.2 per cent last year.

Even so, cement consumption increased by 29.3 per cent to 2,078.8 thousand metric tons, pointing to the sustenance of performance in economic activities in the sector.

The Electricity and Water Supply sector grew by 5.2 per cent compared to a 4.7 per cent contraction in the second quarter of 2020.

Total electricity generated increased from 2,634.9 million kilowatt-hours in 2020 to 2,975.8 million kilowatt-hours in the quarter under review.

The increase in electricity generation was notable from all sources except geothermal.

Electricity generated from both thermal and wind expanded by about 69 per cent compared to a contraction of 64.9 per cent and 29.3 per cent, in the same quarter of 2020.

Electricity generated from hydro increased by 4.6 per cent to stand at 994.9 million kilowatt-hours in the second quarter of 2021.

The transportation and storage sector reported a growth of 16.9 per cent compared to a contraction of 16.8 per cent in the corresponding quarter of 2020.

The accelerated growth was a result of the lifting of restrictions on domestic and international movement which was in place in the second quarter of 2020.

Freight movement through SGR increased by 25.9 per cent to stand at 1,326 thousand metric tonnes. Passenger transport through SGR increased from 6,363 in 2020 to 304,445.

Consumption of light diesel expanded by 27.4 per cent compared to a contraction of 22.4 per cent in the corresponding quarter of 2020.

Accommodation and Food Service activities recorded a gradual rebound from a contraction reported in the last three quarters of 2020.

The sector grew by 9.1 per cent in the quarter under review to 56.8 per cent contraction in the second quarter of 2020.

This sector was the most hit by the Covid-19 pandemic in 2020 registering a significant decline in the number of visitor arrivals by over 99 per cent, scaling down of hotel operations and in some cases closure of some facilities in the second quarter of 2020.

This improved tremendously in the review period after the relaxation of most of the restrictions.

Financial & insurance activities accelerated during the quarter growing by 9.9 per cent compared to 4.4 per cent in the same period 2020.

The broad money supply expanded from Sh3.9 trillion as at end of June 2020 to Sh4.1 trillion as at end of June 2021.

Net foreign assets reduced from Sh887.4 billion in Q2 last year to Sh781.9 billion by end of June this year.

Edited by D Tarus