Kenyan GDP Rises in Q1 as Economy Gains Traction

According to the latest figures from the National Bureau of Statistics, Kenyan GDP rose by 4.9 percent year-on-year in the first quarter, but tourism was a factor that slowed down the economy. Terrorist organization al-Shabaab is to blame for terrorism in the East African nation, which has kept many tourists at bay. The International Monetary Fund expects 6.0 percent growth in Kenya for 2015, due to such factors as infrastructure investments and declining oil prices, but the government expects 6.9 percent growth for the year.

According to the latest figures from the National Bureau of Statistics, Kenyan GDP rose by 4.9 percent year-on-year in the first quarter, but tourism was a factor that slowed down the economy. Terrorist organization al-Shabaab is to blame for terrorism in the East African nation, which has kept many tourists at bay. The International Monetary Fund expects 6.0 percent growth in Kenya for 2015, due to such factors as infrastructure investments and declining oil prices, but the government expects 6.9 percent growth for the year.

Of all sectors of the Kenyan economy, tourism took the hardest hit. The industry dropped 7.5 percent, with occupancy rates for hotels along the nation’s coastline falling by over 21 percent, and restaurant activity has declined. Aside from tourism, the agriculture sector has taken quite a hit from the nation’s drought crisis. Dry conditions also affected Kenya’s horticulture industry, and vegetable exports dropped 3.3 percent.

Another problem Kenya faces has to do with the country’s textile industry, which has been in decline since the 1980s as market liberalization saw the mass importation of donated clothing from around the world, mostly from Western nations. Kenya imports 100,000 tons of second-hand clothing and shoes, but such imports have crippled the country’s textile trade. Kenya, including other nations in East Africa, is considering banning the importation of such items, but such a move would spark job losses and business failures across the country, which would have negative implications on the country’s unemployment rate. According to The Guardian, some locals fear that such joblessness would lead to upticks in crime and unsafe communities across the country.

Outside of agriculture, textiles, and tourism, Kenya is seeing a boost in all sectors of the economy. Finance, insurance, water, wholesale, and many other sectors have showed positive results. Further, the World Bank recently upgraded Kenya’s income status from lower income to lower middle income. This means that Kenya has joined other nations, such as Tajikistan and Bangladesh, in making anywhere from $1,046 to $4,125 in annual income, notes CNBC Africa.

The government’s strict adherence to monetary and budget policies attributed to part of the gain, boosting the country’s gross national income, including a rebasing of the country’s GDP in early 2015. Overall, Kenya expanded 25 percent while becoming the ninth largest Sub-Saharan African country. Kenya would need to make anywhere from $4,126 to $12,735 to enter upper middle-income status, an honor that was bestowed on other nations such as Paraguay and Mongolia. This can be attainable if the East African country continues to build upon its current successes.