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Kenya's economy expands by 6.2pc in second quarter

Friday September 30 2016
inflation

The rising food prices have driven inflation in Kenya to 6.34 per cent in September. TEA GRAPHIC

Kenya's economy grew faster in the second quarter of this year compared with the same period in 2015, lifted by expansion in agriculture and a strong recovery in tourism, the statistics office said on Friday.

The Kenya National Bureau of Statistics (KNBS) said the economy expanded by 6.2 per cent year-on-year in the second quarter compared with 5.9 per cent in the same period in 2015.

It said agriculture grew 5.5 per cent versus 4 per cent in the year-ago period, while accommodation and food services - which includes tourism - rose 15.3 per cent compared with a contraction of 5 per cent.

"The remarkable growth was on account of a considerable boost from conference tourism as well as an improved security situation. The recovery has also been enhanced by rigorous marketing initiatives that have been implemented over time," KNBS said.

Tourism, along with tea, horticulture and remittances, are Kenya's leading sources of foreign exchange.

In 2015, East Africa's biggest economy struggled with a number of challenges including attacks blamed on Somalia's al Shabaab militants that scared away tourists and eroded foreign exchange earnings in the sector.

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Growth in the transport sector rose to 8.8 per cent in the quarter under review from 6.8 per cent in the same quarter of 2015, KNBS said.

The Finance Ministry forecasts the economy will grow 6 per cent in calendar 2016 and by 7 per cent a year in the medium term, compared with 5.6 per cent last year.

The current account deficit contracted by 6 per cent to Ksh141.92 billion ($1.4 billion), helped by low international oil prices and falling machinery imports, the statistics office said.

Inflation up on high food prices

Meanwhile, the cost of living rose marginally in September to 6.34 per cent from 6.26 per cent the previous month, driven by a rising cost of some food items.

KNBS said the increase in food costs outweighed gains arising from falling fuel prices.

“Between August and September 2016, the food and non-alcoholic drinks index increased by 0.55 per cent,” KNBS said in a statement.

“This was attributed to increase in prices of several food items which outweighed the decrease in others.”

Food takes up the largest share (36 per cent) of the basket of goods that is used to calculate inflation, making it the main driver of the cost of living.

Additional reporting by TEA Reporter

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