NAIROBI, Kenya – Kenya’s economy experienced a significant slowdown in the third quarter of 2024, with growth decelerating to four percent, a marked drop from the six percent recorded during the same period in 2023.
This downturn comes despite easing inflation and a stronger Kenyan Shilling, factors that failed to boost domestic consumption, according to the latest report from the Kenya National Bureau of Statistics (KNBS).
Abdulkadir Awes, KNBS Director of Population and Social Statistics, attributed the slowed growth to declines across most economic sectors.
“Construction activities contracted by 2.0 percent while mining and quarrying posted a contraction of 11.1 percent in the quarter under review,” Awes reported.
The four percent growth rate recorded is the lowest third-quarter growth since the post-COVID-19 period began in 2021, underscoring the ongoing economic challenges.
Gross Domestic Product (GDP), a key measure of a country’s economic health and living standards, reflected this downturn despite some positive performances in other sectors.
While forestry and fishing, transportation and storage, financial and insurance, real estate, and wholesale and retail activities posted moderate growth ranging from 4.2 to 5.5 percent, the gains were insufficient to counterbalance the contractions in construction and mining.
Notably, the accommodation and food service activities sector recorded a robust growth of 13.7 percent, yet this was not enough to offset the broader economic slowdown.
The International Monetary Fund (IMF) had previously projected a deceleration in Kenya’s economic growth, anticipating a drop from 5.6 percent to 5.0 percent in 2024, with similar levels expected in 2025.
These projections add pressure on President William Ruto’s administration, which has been grappling with economic indicators that fail to align with public sentiment.
Inflation eased to an average of 4.08 percent in Q3 2024, down from 6.93 percent in the same quarter of the previous year, primarily driven by lower prices of food and non-alcoholic beverages.
The Kenyan Shilling appreciated against major global currencies, gaining 10.1 percent against the US Dollar, 9.3 percent against the Euro, and 7.7 percent against the Pound Sterling.
However, it depreciated against the Japanese Yen and the South African Rand by 12.7 percent and 6.7 percent, respectively.
The Central Bank of Kenya adjusted the Central Bank Rate (CBR) downward from 13.00 percent in July to 12.75 percent in August and September 2024, compared to 10.50 percent in the corresponding months of 2023.
Additionally, the Nairobi Securities Exchange (NSE) 20 Share Index rose by 17.8 percent, reaching 1,775.7 points in September 2024.
The current account balance showed a slight improvement, narrowing from a deficit of Sh139.8 billion in Q3 2023 to Sh139.2 billion in Q3 2024.
Broad money supply also increased from Sh5.841.1 trillion to Sh5.992.1 billion during the same period, indicating some level of monetary expansion.
Notably, the report does not account for the effects of the Gen Z protests, which disrupted critical state revenue-raising initiatives.
These protests, advocating for various economic and social reforms, could have further complicated the economic landscape, impacting fiscal policies and overall economic sentiment.
