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Kenya抯 economy grows by 5.6 per cent on improved agricultural productivityFriday, May 06, 2016 > 10:22:06
Kenya's economy expanded by 5.6 per cent last year compared to 5.3 per cent in 2014, the Economic Survey 2016 report released yesterday indicates.
The growth has been attributed to better performance by agriculture, construction, finance and insurance and the real estate sectors. The economies of Kenya's neighbours', however, grew at a slower pace. Uganda's economy grew by 5.2 per cent while Tanzania grew by 6.9 per cent. Uganda had registered a 5.9 per cent growth in 2014, while Tanzania grew by 7.2 per cent then.
Kenya's backbone agriculture sector, grew by 5.6 per cent compared to an expansion of 3.4 per cent in 2014 due to abundant rains that boosted production.
Manufacturing sector’s contribution to country's total output increased to 10.3 per cent from 10 per cent previously. The sector grew by 3.5 per cent, performing better than it did in 2014 when it expanded by 3.2 per cent. The improvement was attributed to reduced cost of inputs.The Kenya National Bureau of statistics director general Zachary Mwangi, however, said cheap imports and expensive credit are still hurting the sector.
Tourism took a hit from the Ebola outbreak in West Africa as well as insecurity in the region. Earnings dropped , to record a drop in earnings to 84.6 billion shillings last year, from Sh87.1 billion in 2014.
The banking and finance sector expanded faster at 8.7 per cent compared to 8.3 per cent previously. Last year, the Central Bank raised the base lending rate from 8.5 per cent to 10 per cent in June, and further to 11.5 per cent in July to contain inflation and control exchange rate volatility.
Commercial banks' interest rates on loans and advances rose from an average 15.99 per cent to 17.45 per cent. This did not however dampen credit appetite, with total domestic credit growing by 19.2 per cent last year compared to 16.1 per cent before mainly as a result of increased credit to the government that rose to Sh538.0 billion.
The country's balance of trade improved from a deficit of Sh1.08 trillion to a deficit of Sh997 billion.
The improvement in the balance of trade was due to a rise in exports by 8.2 per cent to Sh581 billion in 2015 and a decline in imports by 2.5 per cent to Sh1,578 billion over the same period.
“The decline in imports was mainly due to a drop in import prices of mineral fuels,” Mwangi said.