Africa Economy: Kenya's economic growth slows down in 2014

Kenya's Gross Domestic Product (GDP) slow down to 5.3 percent in 2014 from 5.7 percent in 2013, said an annual economic survey released Wednesday.

The 2015 Economic Survey published by Kenya National Bureau of Statistics attributes the slow growth to a decline in tourism and lower-than-expected expansion of the agricultural and manufacturing sectors.

"All the sectors of the economy except accommodation and food services sectors, recorded positive growths of varying magnitudes, " said Cabinet Secretary for Devolution and Planning Anne Waiguru during the launch of the survey.

According to the survey, tourism earnings fell 7.3 percent to about 930 million U.S. dollars in 2014, down from 1 billion dollars the previous year as a spate of insecurity and travel advisories issued by key source markets continue to bite.

The survey shows the number of international visitor arrivals contracted by 11 percent from 1.52 million in 2013 to 1.35 million in 2014.

"The main reason for the decline was the ongoing security concerns, negative travel advisories by the key tourism source markets as well as fear of spread of Ebola," it says.

Waiguru said the low international oil prices also fueled expansion of the economy, adding that the growth was largely due to a decrease in oil prices which led to reduction in input costs.

"In fact the total quantity of petroleum products imported in 2014 increased by 12.5 percent to 4.5 million tonnes up from four million tonnes the previous year," she said.

The CS said the total domestic demand for petroleum products in 2014 was 3.9 million tons, which was a 5.3 percent increase compared to the previous year.

She said the economy was also lifted by the increase in exports of goods and services. "The stability of the Kenya shilling against major currencies also contributed to positive economic growth," she added.

Top performing sectors included building and construction, which expanded by 13.1 percent, transport, which grew by 13.7 percent and ICT, which increased by 13.4 percent last year.

Waiguru said the going forward investments in the construction industry are likely to remain robust due to the ongoing government infrastructural projects and the private sector's resilient participation especially in the real estate development.

Manufacturing, which accounts for 10 percent of GDP, grew by 3. 4 percent to 571 million dollars last year compared to a growth of 5.6 percent in 2013.

The survey indicates that the agricultural sector in 2014 expanded by 3.5 percent, which a drop from the 5.2 percent growth registered in 2013. "The total value of marketed agricultural production declined slightly from 3.55 billion U.S. dollars recorded in 2013 to 3.53 billion dollars in 2014," Waiguru said, adding that the government will accelerate efforts aimed at increasing the adoption of commercial agriculture.

The CS noted that the annual average inflation in 2014 increased to 6.9 percent last year from 5.7 per cent in 2013.

"The modest increase in the rate of inflation was attributed to increases in the cost of several food items which outweighed notable falls in the cost of electricity and petroleum products," she said, adding that the fiscal policies in the next financial year will focus on re-orientation of expenditure from recurrent to development. Endi