GDP in Kenya

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Kenya - GDP

Economy loses steam in Q3 amid protracted political uncertainties and ongoing drought

The latest national accounts data released by Kenya’s National Bureau of Statistics on 29 December showed that the economy decelerated in the third quarter of 2017. GDP expanded 4.4% year-on-year in Q3, down from Q2’s 5.0% annual growth. Quarter-on-quarter seasonally-adjusted growth also declined from a revised 0.9% rise in Q2 (previously reported: +1.2% quarter-on-quarter) to 0.4% in Q3. A slowdown in economic activity was observed across almost all sectors, largely stemming from protracted political uncertainties and the ongoing drought.

A breakdown of Q3 GDP by production reveals that the electricity and water supply sector expanded at a considerably slower annual pace than in the previous quarter (Q3: +4.8% year-on-year; Q2: +6.1% yoy) owing to a sharp decline in hydro-electricity generation brought about by a widespread drought that ravaged the nation for much of 2017. The accommodation and food facilities sector also experienced a notable downturn (Q3: +7.3% yoy; Q2: +13.4% yoy) as annual growth in tourist arrivals almost halved from the previous quarter. Moreover, there was a marked output fall in the construction sector (Q3: +4.9 yoy; Q2: +7.5% yoy), and transport and storage sector (Q3: +5.4% yoy; Q2: +8.3% yoy). The manufacturing sector grew at a slightly softer pace (Q3: +2.1% yoy; Q2: +2.3% yoy) as the drought affected agro-processing activities, although the deterioration was relatively marginal thanks to higher production of maize meal supported by a government subsidy. On the upside, the agriculture, forestry and fishing sector picked up from the previous quarter (Q3: +3.1% yoy; Q2: +1.3% yoy) on the back of accelerated tea and fishing output.

Incoming data for the final quarter of 2017 indicates improving prospects for the East African economy, which is expected to recover next year as weather conditions improve and the political scene further stabilizes. The persistence of a cap on commercial bank lending rates will continue to dent growth, however, constraining the availability of credit for borrowers deemed to be typically high-risk, including small- and medium-sized enterprises. While the government has announced intentions to remove the cap, the exact timing is still uncertain. There are speculations that it be will removed in the second half of 2018.

Met the why particular Consensus Forecast panelists see GDP expanding 5.3% in 2018, which is unchanged from last month’s estimate. Panelists foresee growth rising to 5.8% in 2019.

Kenya - GDP Data

2013  2014  2015  2016  2017  
Economic Growth (GDP, annual variation in %)5.9  5.4  5.7  5.9  4.9  

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Kenya GDP Chart

Kenya GDP
Note: GDP, annual variation in %.
Source: Kenya National Bureau of Statistics

Kenya Facts

Bond Yield13.150.0 %Jun 19
Bond Yield13.150.0 %Jun 19
Exchange Rate111.20.05 %Jun 19
Exchange Rate111.20.05 %Jun 19
Stock Market0.20.0 %Jun 12
Stock Market0.20.0 %Jun 12

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