Kenya Spends more on imports as export value drops

Growth momentum in Kenya’s private sector has been falling since the beginning of the financial year.

Kenya’s import bill rose to Sh992 billion in the first six months of 2021 from Sh777 billion in the same period in 2020 as the economy slowly recovers from the Covid-19 impact.

Central Bank of Kenya (CBK) data shows the value of commercial imports in the six months to June amounted to Sh959 million from Sh752 million last year.

Government imports also rose by more than 30 per cent to Sh32.6 billion at the end of the first half of 2021, an increase from Sh24.4 billion same period last year.

The high import bill is attributed to reduced activities in the local manufacturing sector during the period under review amid high demand, especially for machinery.

Imports of machinery and transport equipment accounted for 23 percent (Sh228.2 billion), while mineral fuels accounted for 15.9 per cent (Sh158.7 billion) and chemicals Sh112 billion.

Manufactured goods accounted for a sixth or 30 per cent of the import bill between January-June and the cost hit Sh298 billion.

Even so, the decline in import bills witnessed in April continued for the third straight month falling to Sh160.1 billion in June compared to Sh162.1 billion in May and Sh161.8 billion in April.

Growth momentum in Kenya’s private sector has been falling since the beginning of the financial year, with businesses reporting weaker expansions in output, new orders, employment, and purchasing.

Last month, the cost inflationary pressures rose to a 16-month high as tax changes resulted in a sharp rise in purchase prices.

The headline figure derived from the survey is the Purchasing Managers’ Index (PMI) fell for a second straight month from 51.0 in June to 50.6 in July, to indicate only a marginal improvement in operating conditions across Kenya’s private sector.

The value of selected Kenyan exports jumped to Sh331.1 billion at the end of June from Sh271 billion in the same period a year ago.

March registered the highest amount of exports in the first six months of 2021, at Sh60.2 billion. Some of the exports included in the calculations are; Coffee, tea, horticulture, fish, cement, petroleum, and chemicals.

Coffee exports brought in Sh16.1 billion in the six months to June, up from Sh13.2 billion in 2020, tea exports brought in Sh68 billion, while horticulture exports added Sh73.1 billion to the national income in the six months period.

Kenya’s trade deficit for the first six months of the year widened by 29.7 per cent to Sh640.9 billion on the back of an increase in imports of commercial goods, data from the Central Bank of Kenya (CBK) shows.

The deficit widened in June to Sh103.4 billion compared to Sh99 billion the previous month. The country recorded the second all-time high monthly deficit of Sh118.8 billion in March this year.

Kenya reported the highest ever monthly trade deficit of Sh119.4 billion in September 2014.

Data from CBK shows Kenya’s current account deficit widened to 5.5 percent in 12 months to May compared to 5.2 percent in the same period last year.

This was the highest trade deficit-  a measure of a country’s trade with other nations – in two years since 2018 when the country recorded a 5.8 percent trade shortfall with international partners.

 

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