Kenya: GDP growth remains largely stable in Q1
In the first quarter of 2024, the economy posted a robust expansion of 5.0% year on year, largely stable from 5.1% in the fourth quarter of 2023. That said, the reading marked the softest increase since Q4 2022.
On the production front, the slight annual GDP moderation was broad-based.
Growth in the agricultural sector—which accounted for nearly 22% of GDP in 2023—decelerated to 6.1% year on year (Q4 2023: +6.2% yoy). That said, the sector remained the driving force of the economy in Q1 and benefited from favorable weather and government intervention aimed at increasing output.
Moreover, the manufacturing sector also lost steam, growing 1.4% in Q1 (Q4 2023: +2.0% yoy), and construction sector output increased only 0.1%, far below the prior quarter’s 2.2% expansion. More positively, electricity, gas and water supply growth accelerated to 2.4% (Q4 2023: +1.3% yoy).
In the tertiary sector, the transport sector rose at a slower clip of 3.8% year on year in Q1 (Q4 2023: +8.5% yoy), but growth was buoyed by the well-performing agricultural sector. Lastly, growth of the retail and wholesale trade sector hit an over two-year high of 4.9% in the first quarter (Q4 2023: +2.8% yoy), boosted by the still-ongoing post-pandemic recovery.
Our panelists expect the economy to have gained steam in the second quarter. That said, risks to the projection are skewed to the downside amid recent flooding and the mass protests that broke out at the tail end of the quarter after the government announced a plan to hike taxes.
Shani Smit-Lengton, analyst at Oxford Economics, commented:
“Although Kenya is reeling from the recent floods that have caused loss of life and significant damage to agricultural land and infrastructure, the East African nation continues to receive substantial external support, which will help keep the economy afloat in the short- to medium term.”