(Nairobi) – Kenya’s economy grew by 4.6% in the second quarter of 2024, according to the latest report from the Kenya National Bureau of Statistics (KNBS). This marks a slowdown from the 5.0% growth recorded in the previous quarter and a further decline from 5.6% in the same period last year.
The quarterly report did not provide specific reasons for the reduced growth rate but highlighted several contributing factors. Key sectors, including agriculture, forestry, and fishing, experienced a growth rate of 4.8%, while real estate expanded by 6.0%. Other sectors showing positive performance include financial and insurance activities, which grew by 5.1%, and wholesale and retail trade, which saw an increase of 4.4%. The accommodation and food services sector saw a remarkable rise of 26.6%, driven by increased demand in hospitality and tourism. Additionally, the information and communication sector expanded by 7.2%, and professional, administrative, and support services grew by 6.8%.
Despite these positive performances, some sectors showed signs of contraction. The mining and quarrying sector shrank by 2.7%, while the construction industry experienced a decline of 2.9%. This was in contrast to the 2.7% growth seen in the construction sector during the second quarter of 2023. The performance of these sectors acted as a drag on overall economic growth for the period under review.
Inflation in Kenya also saw a notable change. The inflation rate slowed to 4.87% in the second quarter of 2024, down from 7.94% in the same period of the previous year. This reduction in inflation was largely due to lower transportation costs and declines in the prices of food and non-alcoholic beverages.
On the currency front, the Kenyan shilling continued to appreciate, building on its gains from the first quarter of 2024. The local currency strengthened against major global currencies, with notable gains of 5.6% against the Euro, 4.6% against the US Dollar, and 3.7% against the Pound Sterling. The Kenyan shilling also appreciated against regional currencies, including the South African rand, Tanzanian shilling, and Ugandan shilling.
Overall, while the slowdown in GDP growth reflects challenges in certain sectors, the continued strength of the shilling and lower inflation offer some positive signals for the country’s economic outlook. However, the mixed performance across different sectors suggests that more targeted interventions may be needed to maintain growth momentum in the coming quarters.