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Kenya's economy declines slightly to 4.3 pct

02 October 2013, 13:36

Nairobi - Kenya's economy registered a 4.3 percent growth in the second quarter which was slightly slower than the growth of 4.4 percent during the same quarter of 2012, the national statistics bureau said on Tuesday.

The Kenya National Bureau of Statistics Bureau (KNBS) said the growth was mainly buoyed by strong expansions of activities of agriculture, forestry and manufacturing as well as electricity, water and financial intermediation.

"Compared to the first quarter of 2013, the economy expanded by 0.7 percent during the second quarter as measured by seasonally adjusted Gross Domestic Product (GDP)," the bureau said in a statement released in Nairobi.

It said hotels and restaurants recorded a significant reduction while Wholesale and Retail trade's growth slowed although marginally.

The hotels and restaurant sector growth is estimated to have contracted by 11.4 percent compared to a growth of 2.9 percent realized in the same quarter in 2012. "The low bookings were mainly linked to uncertainties over the country's general elections held in March this year," KNBS said.

The report comes after the government expressed confidence economic growth will remain strong and unshaken by the recent terrorists attack at the shopping mall that disrupted several businesses on Sept. 21.

Cabinet Secretary for Treasury Henry Rotich said the country's growth forecast for 2013 still remains unchanged at around 5.5 percent and 6 percent.

Rotich says the economic policies and structural reforms measures which the government has put in place have helped to boost resilience of the economy and fostered broad based economic growth.

The bureau said the second quarter was characterized by low information rate which averaged at 4.37 percent compared to an average of 11.78 percent that prevailed during the second quarter of 2012.

"The ease in the inflationary pressure was mainly on account of lower food and fuel prices as well as a strong shilling," it said, adding that the local currency strengthened against all its major trading currencies except the euro during the review period compared to the same period of 2012.

KNBS said international oil prices declined during the second quarter compared to the previous one but remained relatively higher than the levels reached during the second quarter.

According to the report, interest rates declined significantly during the period as inter-bank rates recorded the most drastic drop from 16.84 during the second quarter of 2012 to 7.41 in the second quarter.

The reports shows that activities of the capital markets were more vibrant during the period compared to the previous in 2012 as Nairobi Securities Exchange registered an upsurge of 47.2 percent in the number of shares traded to 114,173 transactions from 77,543 transactions recorded in the second quarter of 2012.

KNBS said the agriculture sector grew by 5.0 percent compared to a growth of 2 percent in the same period in 2012 with most of the agriculture crops recording improved production.

Tea and horticulture remained the major contributors to the sectors' growth with tea having recorded a growth of 31.1 percent during the quarter compared to 8.1 percent growth in 2012.

"Outputs of coffee and sugarcane had little influence on the growth of the sector with respective growths of 1.6 percent and 1. 1 percent during the quarter," KNBS said.



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