Kenya’s economy has maintained a strong performance in the first quarter of 2024, according to a report by the Central Bank of Kenya (CBK).
In a Monetary Policy Committee (MPC) report shared on April 3, the CBK noted that leading indicators had shown a continued strong performance of the Kenyan economy.
As per the report, the registered growth is attributable to strong performances in the agriculture and service sectors- particularly in the accommodation and food services and information and communication.
“Leading indicators point to continued strong performance of the Kenyan economy in the first quarter of 2024, reflecting robust activity in the agriculture and service sectors, particularly accommodation and food services, and information and communication,” the CBK reported.
However, according to the report, the volume of Kenya’s exports has continued to decline with statistics showing that goods exports declined by 1.7 percent in the 12 months to February 2024 compared to an increase of 9.6 percent in a similar period in 2023.
The decline in exports in 2023 cut across several categories, except food, petroleum products and manufactured goods exports which increased by 3.0 percent, 20.3 percent, and 1.4 percent, respectively.
On the other hand, goods imports declined by 8.5 percent in the 12 months to February 2024 compared to a growth of 3.5 percent in a similar period of 2023, reflecting lower imports across all categories, except food and crude materials.
The number of tourists visiting Kenya also improved by 27.6 percent in the 12 months to January 2024 compared to a similar period in 2023 and were 20.3 percent higher in January 2024 compared to January 2023.
CBK predicts slower inflation rate
In the report compiled after a Monetary Policy Committee meeting, CBK also highlighted that a survey had shown that inflation rate will continue to decrease as a result of lower food prices expected after favorable weather conditions in the country.
Recent gains by the Kenyan Shilling against the US dollar and reduction of fuel prices are also expected to contribute to further ease of inflation rate in the coming months.
According to the CBK report, overall inflation in the country fell to 5.7% in March 2024 from 6.3 percent in February, driven by lower food and fuel inflation.
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Food inflation also declined to 5.8 percent in March from 6.9 percent in February driven by lower prices of some food items including maize and wheat products, carrots, kales/sukuma wiki, spinach, and cabbages.
CEOs optimistic of faster growth
Further in the report, CBK noted that a CEOs Survey and Market Perceptions Survey conducted ahead of the MPC meeting revealed increased optimism about business activity and economic growth prospects for the next 12 months.
CEOs and respondents interviewed in the survey believe enhanced agricultural performance due to favorable weather and government interventions in the sector will help to boost the economic growth rate in Kenya.
In addition, easing inflation, strengthening of the Kenya Shilling and a resilient private sector are also expected to continue favoring economic growth in various sectors.
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However, the respondents have raised concerns about taxation, high interest rates, and geopolitical risks as some of the expected impediments to economic growth.
In the resolutions reached by the MPC, the CBK will maintain the Central Bank Lending Rate (CBR) at 13% in attempts to continue driving the inflation rate downwards towards the 5% target.
“The MPC will closely monitor the impact of the policy measures as well as developments in the global and domestic economy and stands ready to take further action as necessary in line with its mandate,” CBK Governor Kamau Thugge noted.
