Kenya's economy grew by 4.9 percent year-on-year in first quarter 2011 from 4.3 percent in the same period in 2010, but drought and high energy costs stifled slowed output and fuelled a spike in inflation, the Kenya National Bureau of Statistics said on Thursday.
Agriculture, mainly rain-fed in east Africa's biggest economy contributes about a quarter to the country's gross domestic product (GDP) while fuel consumption cuts across all sector of the economy. "The sector (agriculture) recorded a slowed growth of 2.2 percent in the first quarter of 2011 compared with a growth of 5.7 percent over the same quarter in 2010," said the Kenya National Bureau of Statistics in its quarterly review. "Subdued rainfall during the quarter led to the deceleration in growth as a result of decreased production of a number of marketed products, notably the volume of tea and coffee," said the statement.
The world's top exporter of black tea expects to produce less green leaves this year because of poor weather. The World Bank has trimmed its forecast for Kenya's economic growth for this year from to 5 percent from 5.3 percent attributing this to high inflation and drought. The government, on the other hand, projects an expansion of 4.2 percent in 2011.
Kenya's year-on-year inflation shot to 14.5 percent in June for the eighth straight monthly rise from 12.95 percent in May, thanks to higher food and power costs. Analysts said the output for the second quarter, particularly in agriculture, was still poor, but relatively better than the first quarter. Besides agriculture, Kenya's economy also relies on tourism, manufacturing, financial services, transport and telecommunications. The construction sector registered the highest growth in the first quarter, of 10.7 percent compared with 0.3 percent in 2010. "Activities of the construction sector expanded substantially mainly supported by increased bank credit for real estate development to the private sector," said the statement.
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