Economic Analysis - Weak Q1 Data Re-affirms Slowdown In 2017 - SEPT 2017

BMI View : Q117 data justifies our view for a slowdown in the Kenyan economy in 2017, as economic activity struggles to recover from weak loan growth and agricultural output in recent months . That said, headwinds in 2017 have been largely transitory and growth will accelerate from H2 as a packed infrastructure pipeline continues to attract investment.

Kenya's economy will see a slight dip in growth in 2017, as adverse weather conditions and a cautious lending environment in H1 weigh on annual headline GDP. The Kenya National Bureau of Statistics' (KNBS) most recent GDP data release for Q117 indicates the economy grew by just 4.7% year-on-year, down from 6.1% the previous quarter as the agriculture sector contracted on the back of weak harvests. While we do not use the KNBS as a source for our own historic GDP data, the release reinforces our view for a slowdown in economic activity to 5.2% in 2017 from an estimated 5.9% in 2016. Although the headwinds to growth this year are largely transitory and will likely dissipate in H2, a poor performance in H1 will weigh on the year's headline GDP figures. Real GDP growth will accelerate in 2018 as the country moves away from these headwinds and investment into a packed infrastructure pipeline buoys the economy, reaching 5.9% according to our forecasts.

H2 Recovery Will Not Save Annual Figures

Growth Dips In 2017 After Weak H1
Kenya - GDP
e/f = BMI estimate/forecast. Source: UN/BMI

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