Dec. 24 (Bloomberg) -- Kenyan economic growth accelerated in the third quarter as the central bank cut interest rates to support the expansion of East Africa’s biggest economy.
Gross domestic product rose 4.7 percent from a year earlier, compared with a revised 3.3 percent in the previous three-month period, the Kenya National Bureau of Statistics said today in a statement e-mailed from the capital, Nairobi.
The effects of the central bank’s interest-rate cuts “started to trickle through the economy in the third quarter,” Peter Mutuku, head of trading at Nairobi-based Bank of Africa Ltd., said by phone before the data was released. “The banks didn’t react very quickly to the central-bank cuts with cheaper lending rates and we should see the wider effects of those cuts early next year or possibly after March elections.” Kenya is scheduled to hold general elections on March 4.
Kenya’s central bank raised borrowing costs by a record 12.25 percentage points in 2011 to help bolster the shilling after it fell to a record low against the dollar and to curb price pressures following a regional drought. This year, slowing inflation gave the central bank leeway to cut its benchmark lending rate for the first time in 18 months on July 5, followed by two more reductions which have lowered it to 11 percent.
Ample rainfall boosted agricultural production, which expanded 6.9 percent in the third quarter from 1.9 percent three months earlier, and filled hydropower dams, improving growth in electricity to 13.7 percent from 7.4 percent. Kenya is the world’s largest exporter of black tea.
The expansion was 2.2 percent between July and September from 0.5 percent in the second quarter on a seasonally adjusted basis, according to the statistics bureau.
Kenya’s shilling climbed less than 0.1 percent to 85.90 a dollar by 1:49 p.m. in the capital, Nairobi, paring its loss this year to 1 percent, according to data compiled by Bloomberg.
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