Agricultural boom drives Kenya’s economic expansion in the second quarter

According to the most recent official data, Kenya’s economy expanded by 5.4% in the second quarter of 2023 compared to 5.2% in the same quarter of 2022.

This is true even though just one important subsector, agriculture, outperformed the previous year’s performance.

The agricultural, forestry, and fishery sectors rose by 7.7%, according to the Kenya National Bureau of Statistics’ Quarterly Gross Domestic Product Report, which was published on Thursday. This is a significant improvement over the 2.4% contraction seen in the same quarter of 2022.

The success was mostly attributable to favorable weather, which led to a rise in agricultural output. This expansion was notably noticeable in the production of milk, vegetables, fruits, tea, and coffee. In contrast to the equivalent quarter in 2022, cut flower and sugarcane production decreased during the review period.

“The growth was primarily underpinned by a rebound in the agricultural activities, that grew by 7.7 percent during the period under review,” KNBS said in its report.

Financial and insurance (13.5%), lodging and food service (12.2%), and information and communication (6.4%) were some of the other industries that supported development during the time under consideration.

According to KNBS, most macroeconomic indicators showed an increasing trend over the study period. The majority of the other subsectors, with the exception of agriculture, saw declines, including finance and insurance, lodging and food service, and information and communication.

For instance, growth in the manufacturing sector fell to 1.5% from 3.6% in the second quarter of 2022. Comparing the current quarter to the same time in 2022, the construction industry had a more muted rise of 2.6%, which was primarily driven by an increase in cement consumption of 0.4%, or 2.3 million tonnes.

From June 2022 to June 2023, credit provided to businesses in the construction industry grew from Sh136.5 billion to Sh141.7 billion.

The number of shares traded on the Nairobi Securities Exchange decreased from 358 million in June 2022 to 211 million in June 2023 over the time period under consideration.

As a result, the total value of shares traded dropped from Sh9.6 billion to Sh4.1 billion, and the NSE 20 Share Index dropped from 1,613 points in June 2022 to 1,575 points, a fall of 38 points.