Kenya in first recession since 2000 as Covid-19 ravages the economy

KENYA – Kenya slid into a recession for the first time in two decades in the third quarter of 2020 as measures introduced by the East African nation to slow the spread of the Covid-19 pandemic continued to hurt output.

Gross domestic product in East Africa’s biggest economy fell 1.1% compared with a year earlier, after shrinking a revised 5.5% in the second quarter, the Kenya National Bureau of Statistics told Money Web.

The outcome matched median of three economists’ estimates in a Bloomberg survey.

Before the decline in the second quarter, the economy last contracted in the third quarter of 2008, when post-election violence led to a 1.6% drop in output, according to the statistics office.

The state agency only started publishing quarterly GDP data in 2000.

Kenya confirmed its first coronavirus infection in mid-March last yar and later imposed a partial lockdown.

Shutdowns in key markets such as the European Union and the UK as well as global travel restrictions hit the country’s main foreign-income earners, including tourism and exports of tea, flowers, fruit, and vegetables.

Agriculture, which makes up a third of GDP, grew by 6.3%, compared with a 7.3% expansion in the April-to-June period, this was helped by tea production, which increased 14% in the quarter compared with a year earlier, thanks to favourable weather.

“Kenya’s economy is expected to rebound to growth of 6.9% in 2021, from an estimated 1% contraction last year”

World Bank

Kenya is the world’s biggest exporter of the black tea.

Education and accommodation and food services, which suffered the most during the nation’s lockdown, contracted by 42% and 58% respectively compared with a contraction of 56% and 83% respectively in the second quarter.

Education sector’s decline was deeper and a bigger drag on growth in the second and third quarters than expected, said Yvonne Mhango, sub-Saharan Africa economist at Renaissance Capital.

The brokerage firm expects to cut its 2020 growth estimate from 1.5% but maintain 4.2% for this year, she said.

The World Bank sees Kenya’s economy rebounding to growth of 6.9% in 2021, from an estimated 1% contraction last year, according to the lender’s latest Global Economic Prospects report.

The nation’s Treasury estimates GDP managed to increase in 2020, by 0.6%, and expansion could pick up to 6.4% this year, before slowing to about 5.5% in 2022 due to the uncertainty wrought by elections scheduled for that year.

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