By Helen Nyambura-Mwaura
NAIROBI (Reuters) – Kenya said on Wednesday its economy grew in the second quarter of 2009 after two consecutive quarters of decline, underpinned by a rebound in the tourism sector, while headline inflation eased to 17.9 percent.
Gross domestic product rose 2.1 percent in the second quarter of 2009 from a year earlier after a revised 4.0 percent increase in the first three months of the year, the Kenya National Bureau of Statistics said in a statement.
On a seasonally adjusted basis, second quarter GDP increased 1.5 percent from the first three months of the year — the first quarter-on-quarter increase since the third quarter of 2008.
“There’s a bit of growth happening but what is key is what happens to agriculture,” said Ignitius Chicha, head of treasury at Citi. “If we have sufficient rains as opposed to floods in some areas and drought in others, then it will be good.”
Post-election violence at the start of 2008, recurrent drought and the global crisis have curbed growth in east Africa’s biggest economy. It expanded by a mere 1.7 percent last year from 7.1 percent in 2007.
“Sectoral performances varied considerably with the hotels and restaurants achieving the highest growth of 24.2 percent reflecting a recovery in tourism while the drought caused electricity and water to record the largest contraction of 5 percent,” the statistics office said.
The agriculture and forestry sector, which is mainly dependent on rain, declined 2.7 percent in the second quarter, following a 1.9 percent drop in the same period of 2008.
Despite the relatively better performance in the tourism and construction sectors, growth is largely hinged on farming, which accounts for about 25 percent of GDP.
Meteorologists forecast a mild version of El Nino weather in seasonal rains starting in October. The phenomenon is caused by changing sea temperatures in the Pacific Ocean bringing drought to some places around the world, heavy storms or harsh winters to others.
The government has forecast more robust activity in the fourth quarter and forecasts growth of 3 percent in 2009.
The central bank said last week that while risks to growth had “significantly increased” in 2009, a stimulus package unveiled in the June would spur spending and create jobs, rains would reduce power rationing and higher tea and coffee prices may boost spending.
The bureau of the statistics also reported that the consumer price index rose 1.1 percent in September from a month earlier, leaving the headline year-on-year rate at 17.9 percent, down from 18.4 percent in August.
Core inflation, which excludes food items, also eased to 3.2 percent from 3.5 percent in August, well below the central bank’s 5 percent target.
Food and non-alcoholic drinks prices rose 1.4 percent in September from August, driven by increases in the cost of kale, milk, sugar and cabbages. But there were notable falls in the price of maize flour, onions, tomatoes and potatoes.
Food and non-alcoholic drinks make up 50.50 percent of the consumer price basket. However, this is likely to be reduced when a new series is released next month. Analysts expect the headline inflation rate to drop with the new calculation.
Source: www.reuters.com
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