Economy slows down in first quarter

Kenya’s economy slowed down to 4.4 per cent in the first quarter of this year, compared to the 5.6 per cent registered in the same period last year.

The country’s over-reliance on costly thermal-generated electricity is one of the reasons the economy declined.

Despite heavy rains experienced in the first quarter of 2010, electricity and water returned a negative growth (-1.1 per cent), attributed to increased production of thermal-generated electricity.

According to statistics released on Thursday by the Kenya National Bureau of Statistics (KNBS), the bulk of electricity produced was through thermal generation, which accounted for 38 per cent of total production compared to a 27 per cent share in 2009.

“The increased share of thermal-generation led to low value addition, considering its high cost of production,” said a statement sent by KNBS’s director general, Mr Anthony Kilele.

Geothermal and hydro accounted for 24 per cent and 38 per cent of the total electricity generated, compared to 23 per cent and 50 per cent shares in 2009, meaning that gains from the high rainfall during the period have not been realised.

Local electricity generation decreased to 1,335 million KWh in 2010, compared to 1,377 million KWh in 2009.

Agriculture and forestry recorded a 4.6 per cent growth in the first quarter of 2010.

This was the first turnaround seen in agriculture after six consecutive quarterly contractions.

KNBS says this growth was due to the improved output of tea, maize, beans, potatoes and milk.

However, the output of horticultural products, coffee and sugarcane declined.

Financial services, mining and quarrying, manufacturing, construction, transport and communications, and whole and retail trade, recorded growth.

Manufacturing expanded from 5.0 per cent in the first quarter of 2009 to 7.8 per cent this year.

Production of most of the manufactured products increased with beer, wheat flour, and dairy recording the highest increases in the foods category.