Kenya’s economy grew at a faster pace than expected in the third quarter, but slower than in the previous five quarters as a drought reduced farm output and election season fears curbed investment and consumer spending.
Gross domestic product expanded 4.7% in the three months through September from a year earlier, compared with 5.2% in the previous quarter, the Kenya National Bureau of Statistics said in an emailed report on Friday. That was better than the median of five economists’ estimates in a Bloomberg survey for an expansion of 4%.
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Growth was dragged down by agriculture, which contracted for the fourth consecutive quarter as the worst drought in four decades decimated crops and animal herds and left more than 5 million people confronting food shortages. Production of key exports including tea, flowers and vegetables was also hit by rising costs of fertilizer, fuel and other inputs. Vegetable exports declined by more than a quarter to 13,808 metric tons in the quarter, compared with a year earlier.
Farming is a mainstay of East Africa’s biggest economy, accounting for almost a quarter of total output and employing more than 70% of rural inhabitants.
Economic output was also curbed by investors taking a wait-and-see approach to Kenya ahead of August presidential elections, which then-Deputy President William Ruto won by a narrow margin. The vote proceeded peacefully, unlike several previous contests that were marred by upheaval.
Ruto plans to cut spending by about $3 billion and triple annual tax collections to 5 trillion shillings ($41 billion) in a bid to contain debt and boost growth. He aims to bolster investment in agriculture, small businesses, affordable housing, health care and the digital economy.
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The International Monetary Fund sees Kenya’s economy expanding 5.3% this year, marginally less than the country’s Treasury forecast of 5.5%.
