Battered by COVID-19 restrictions, Kenya’s economy slumps into first recession since 2000

Kenya slipped into an economic recession for the first time since the third quarter of 2020 as the restrictions introduced by the government in the wake of the COVID-19 pandemic took a toll on key sectors of the economy.

The East African country’s gross domestic product (GDP) fell 1.1% compared with a year earlier, after shrinking a revised 5.5% in the second quarter, data from the Kenya National Bureau of Statistics indicated.

The last time Kenya’s economy contracted was in the third quarter of 2008, when post-election violence led to a 1.6% drop in output, according to KNBS. However, the agency only began publishing such data in 2000.

President Uhuru Kenyatta’s government imposed a partial lockdown in March, remains.

The agricultural sector, a key pilar contributing about a third of GDP, grew by 6.3% in third quarter compared with a 7.3% expansion in the April-to-June period. That was aided by tea production, which jumped 14% in the quarter compared with a year earlier, thanks to favorable weather. Shutdowns in key markets such as the European Union and the U.K. hurt the sale of the produce that makes up the country’s main foreign income earners – tea, flowers.

Education and accomodation and food services suffered the most during the country’s lockdown, contracting by 42% and 58% respectively. That compares with a contraction of 56% and 83% in the second quarter.

The World Bank projects Kenya’s economy will rebound to a growth of 6.9% in 2021 from an estimated contraction of 1% last year, according to the Washington-based lender’s latest Global Economic Prospects report.

The Ministry of Finance estimates GDP managed to jump by 0.6% in 2020, and said expansion could pick up to 6.4% this year, before slowing to about 5.5% in 2022 due to the uncertainty wrought by elections scheduled for that year.

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