Kenya Third-Quarter GDP rises amid lower interest rates
26th December 2012- Kenya’s economy expanded by 4.7 per cent in the third quarter of 2012 compared 4.0 percent growth recorded in the same quarter of 2011. The expansion was more robust in comparison to the preceding quarters of 2012 primarily due to strong performances of the Agriculture and forestry, Fishing, Manufacturing, Transport and communication and a turnaround in the performance of the Electricity industry. On the other hand, Construction, Hotels and restaurants, and Mining and quarrying experienced decelerated growths over the same period. Wholesale and retail trade registered a strong growth despite being a deceleration compared to the corresponding quarter of 2011.
Seasonally adjusted Gross Domestic Product, which compares consecutive quarters, expanded by 2.2 per cent in the third quarter of 2012, which was significantly better than the 0.5 per cent recorded in the second quarter of 2012.
The period under review was characterized by low inflation rate, high interest rates and stable exchange rate of the shilling against major world and regional currencies. Inflation averaged at 6.4 per cent during the review period from a high 16.5 per cent experienced during the third quarter of 2011.
The ease in the inflationary pressures was mainly on account of lower food and fuel prices. During the review period the exchange rate averaged at KSh 84.60, KSh 106.3 and KSh 108.37 against the US Dollar, Euro and 100 Japanese Yen, respectively.
Regionally, the Kenya Shilling exchanged at Tanzania Shilling 18.63 and Uganda Shilling 29.62 while the South African Rand averaged at KSh 10.2. During the third quarter of 2011, the exchanges rates were KSh 94.6, KSh 133.5 and KSh122.9 against the US Dollar, Euro and 100 Japanese Yen, respectively.
High interest rates that prevailed during the quarter under review were on account of the Central Bank’s sustenance of a tight monetary policy stance. Expansion in broad money supply slowed to 13.6 per cent during the review period compared to a growth of 18.0 percent during a similar period of 2011. Weighted interest rates on commercial banks loans and advances rose significantly from an average of 14.41 per cent during the third quarter of 2011 to 20.0 per cent in corresponding period of 2012.
Source: Kenya National Bureau of Statistics
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