Kenya Economic Growth Little Changed as Vote Held Back Business
Kenya’s economic growth rate was little changed in the first quarter as the prospect of unrest and political instability before elections held back businesses.
Gross domestic product in the three months through March expanded 5.2 percent on an annual basis, compared with a revised 5.1 percent in the previous quarter, the Nairobi-based Kenya National Bureau of Statistics said by e-mail today.
“Uncertainty on the outcome of elections damped business,” Yvonne Mhango, a Johannesburg-based economist at Renaissance Capital, said in a phone interview before publication of the data. “We expect performance in the first quarter will be weakest relative to rest of the year.”
President Uhuru Kenyatta was voted into office on March 4 in elections that passed largely peacefully unlike the bloodshed that followed the last disputed election in December 2007. More than 1,100 people died in clashes sparked by allegations of vote-rigging by the opposition over two months.
Agriculture, which represents one-fifth of GDP, expanded 8.3 percent in the first quarter from 4.8 percent in the last three months of 2012, helped by good rains in farmlands, the agency said. Kenya is the world’s biggest exporter of black tea and it supplies one-third of all flowers traded in Europe.
In contrast, there was “a wait-and-see attitude adopted by producers and consumers in relation to the elections, which led to suppressed activities of manufacturing, hotels and restaurants and financial intermediation,” the bureau said.
The government forecasts the economy will grow 5.8 percent this year from 4.6 percent in 2012. Kenyatta is pursuing 10 percent annual growth to help the country reach middle-income status within a generation and lift 10 million people from poverty by 2017.
The sluggish economic performance came amid slowing credit growth to private industry, which eased to 11.2 percent in the year ending March compared with 24 percent the same period of 2012 and a target of 13.7 percent, the central bank said today.
“Sectors most exposed to credit did not perform well because banks held back credit to the private sector during the election period,” Mhango said. “Elections are behind us and now investments should pick up.”
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