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TOUGH TIMES

Weak currency, suppressed growth hurt economy in Q3 2019

In Summary
  • Inflation edged upwards to average at 5.03 per cent during the review quarter compared to 4.7 per cent in 2018
  • According to KNBS, the economy grew 5.1 per cent in September 2019 compared with 6.4 per cent in the same period in 2018
LOOSE CHANGE: The Kenya shilling coins.Photo/Elkana Jacob
LOOSE CHANGE: The Kenya shilling coins.Photo/Elkana Jacob

Kenya’s shilling dropped by 2.8 per cent against the US dollar in a quarter ended September 2019, pushing up the cost of living as traders passed the increased import bill to consumers.

The quarterly economic data released by the Kenya National Bureau of Statistics (KNBS) Tuesday shows Inflation edged upwards to average at 5.03 per cent during the review quarter compared to 4.7 per cent in the same quarter of 2018.

The rise in inflation was mainly on account of higher prices of food, house rent, cooking fuels and the rising cost of transportation.

''During the review quarter, macroeconomic indicators showed mixed performances but largely pointed to reduced economic activity compared to the third quarter of 2018,’’ the state statistician said.

The weak currency coupled with suppressed growth in most of the sectors of the economy saw the country’s economy grow at a much slower pace year-on-year in the third quarter ended September 2019.

According to KNBS, the economy grew 5.1 per cent in September 2019 compared with 6.4 per cent in the same period in 2018.

The agricultural sector was the worst hit, growing at a mere 3.2 per cent more than half the sector’s growth in the corresponding quarter in 2018 when it grew at 6.9 per cent.

The slowed performance was occasioned by relatively slower growths manufacturing (3.1 per cent); electricity and water supply (4.9 per cent) and construction (6.6 per cent)

Other sectors that witnessed slower growth include wholesale and retail trade (4.7 per cent) and transportation and storage (7.1 per cent) relative to notable performances recorded in the same quarter of 2018.

''The weak growth was however supported by improved performance in other sectors including mining, financial, and real estate,’’ KNBS said.

The Nairobi Securities Exchange (NSE) was also witnessed low trading, with the NSE20 share index declining to 2,432 points from 2,876 points in a similar quarter in 2018.