Kenyan Growth Rate Slows in Second Quarter on Vote Uncertainty

Kenya’s economic growth slowed in the second quarter following a legal challenge over the outcome of a presidential election that held back business and tourism.

Gross domestic product in the three months through June rose 4.3 percent on an annual basis, compared with 5.2 percent in the previous quarter, the Nairobi-based Kenya National Bureau of Statistics said today in an e-mailed statement.

“There was a petition in court challenging the outcome of the election,” Vimal Parmar, head of research for Nairobi-based Burbidge Capital, said by phone. “That issue still held back business activity.”

President Uhuru Kenyatta was voted into office on March 4 in elections that were broadly peaceful, unlike the bloodshed that followed the last disputed election in December 2007, in which more than 1,100 people died in ethnic clashes.

After this year’s presidential vote, Kenya’s Supreme Court upheld the victory of Kenyatta, rejecting a petition filed by defeated rival, former Prime Minister Raila Odinga, challenging the result. Odinga accepted the court’s March 30 ruling, easing tensions. Kenyatta was inaugurated as the leader on April 9.

Kenyatta and Deputy President William Ruto have been indicted on crimes against humanity charges by the International Criminal Court for organizing the 2007-08 post-election clashes. They both deny the accusations.

Farming Eases

Agriculture, which accounts for a fifth of GDP, grew by 5 percent in the second quarter from 8.1 percent in the first quarter, while construction slowed to 6.7 percent from 13.3 percent. The leisure industry, including restaurants and hotels, contracted 11.4 percent after shrinking 15.8 percent. Tourist arrivals to Kenya dropped 12 percent to 495,978 in the first half from a year earlier, according to government figures.

“The low bookings were mainly linked to uncertainties over the country’s general elections held in March this year,” the statistics bureau said, according to the statement.

The government forecasts the economy will grow 5.5 percent to 6 percent this year from 4.6 percent in 2012. Treasury Secretary Henry Rotich said the forecast for 2013 growth is unchanged even after Islamist militants attacked a shopping mall in the capital, Nairobi, on Sept. 21, leaving 67 civilians and security forces dead over the four-day ordeal.

On a seasonally adjusted basis, the economy expanded 0.7 percent between April and June from 0.5 percent in the previous three months. The economy grew 4.4 percent on an annual basis in the second quarter of 2012, the statistics office said.

To contact the reporter on this story: David Malingha Doya in Nairobi at dmalingha@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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