Economy grows by 5.5 per cent in third quarter

A Nyeri resident enjoys a ride on a travellator at Naivas supermarket moments after it was officially opened on December 30, 2014. This is the 38th branch in Kenya to be opened by the supermarket chain. PHOTO | JOSEPH KANYI |   NATION MEDIA GROUP

In Summary

• Figure, however, falls short of what was attained in 2013; blamed on insecurity and Ebola.
• In a similar period in 2013, the economy registered growth of 6.2 per cent.

By JOSHUA MASINDE
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Kenya’s economy expanded by 5.5 per cent in the third quarter of 2014 but fell short of growth in a corresponding period in 2013.

Growth between July and September 2014 was supported expansion in construction, finance and insurance, wholesale and retail trade, information and communication, agriculture and forestry sectors. 

“All the sectors of the economy recorded positive growth except accommodation and food services which has consistently been on the decline since last year,” Kenya National Bureau of Statistics said on Tuesday when it released the data.

In a similar period in 2013, the economy registered growth of 6.2 per cent following rebasing of the gross domestic product that saw the economy expand by 25 per cent.

The move brought in sectors like real estate, information and communication technology and mobile money financial services factored in the calculation of the GDP.

TOURISM DECLINE

Growth was slowed down by contraction of hospitality industry, which declined by 14.6 per cent compared to a fall of 3.9 per cent in the review period.

This was attributed to insecurity concerns, negative travel advisories by some key tourist source countries and the perceived Ebola risks in Kenya due to the country’s geopolitical location and connectivity with West Africa.

“This resulted to an estimated drop in beds occupancy of 60 per cent in coastal beach hotels and twenty eight per cent in Nairobi high class hotels,” the statistics body said.

The government has since cut its economic growth forecast for 2014 to between 5 per cent and 5.5 per cent down from an earlier projection of 5.8 per cent due to insecurity and poor performance of the agriculture sector.

The construction sector recorded the highest growth of 11 per cent in the third quarter of 2014 compared to a growth of 8.6 per cent in a similar quarter in 2013.

The sector’s growth has been on account of sustained development of the real estate by the private sector and infrastructure development by the public sector.