Kenya's Economy Grows By 5.9% In Q3 2023 On Buoyant Agricultural Sector

• Kenya's economy rebounded in the third quarter of 2023 as agricultural activities regained momentum due to favourable weather conditions
• Kenya National Bureau of Statistics (KNBS) report showed that real Gross Domestic Product (GDP) grew from 4.3% in 2022 to 5.9% in 2023
• Inflation eased during the same period under review as prices of agricultural goods reduced

TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

Kenya's economy regained momentum in the third quarter of 2023, data from the Kenya National Bureau of Statistics (KNBS) has shown.

The KNBS report showed the country's real Gross Domestic Product (GDP) grew by 5.9%, compared to 4.3% reported during a similar period in 2022.

Which agricultural sectors performed well in 2023?

KNBS attributed the growth to a rebound in agricultural activities supported by favourable weather conditions.

"During the review quarter, Agriculture, Forestry, and Fishing activities’ Gross Value Added rose by 6.7% compared to a contraction of 1.3% in the third quarter of 2022 owing to favourable weather conditions that characterised the better part of 2023, read KNBS report in part.

Fruit exports increased by 84.3% from 32,388.1 metric tonnes in the third quarter of 2022 to 59,684.5 metric tonnes in the period under review.

Vegetable exports and tea production rose by 35.4% and 28% to stand at 20,427.1 metric tonnes and 138,771.6 metric tonnes, respectively.

Milk processors also grew their milk uptake from farmers during the same period under review.

Reduced sugar production

Despite positive growth in other sectors, production of sugarcane dropped significantly, with deliveries declining by 55.1% from 1,944.7 thousand metric tonnes in the third quarter of 2022 to 874.0 thousand metric tonnes.

This resulted in an increase in sugar prices as the government halted local sugar production for five months until November 2023 to allow sugarcane to mature.

A kilogram of sugar cost an average of between KSh 210 and KSh 230 across retailers.

Which other sectors revived Kenya's economy?

The economic growth was also buoyed by positive changes in Financial and Insurance (14.7%), Information and Communication (7.3%) and Accommodation & Food Service (26.0%) activities.

"The substantial growth in Accommodation and Food activities was manifest in the significant increase in the number of visitor arrivals in the country," the report continued.

Inflation eased from an average of 8.67% recorded in the third quarter of 2022 to 6.93% in the quarter under review.

Kenya's inflation

This drop in inflation reciprocated in the fourth quarter of 2023 to 6.6% in December 2023.

The prices of mangoes, potatoes, sifted maize flour and fortified maize flour went down by 5.7, 4.9, 3.8 and 3.7%, respectively.

During the period under review, the prices of carrots, kale (sukuma-wiki), mutton/goat meat and beef with bones increased by 14.5, 6.2. 5.1 and 3.6%, respectively.

Between November and December, there was a drop in the prices of petrol and diesel by 2.3% and 1% respectively, but fares rose.

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Agricultural activities increased more in quarter 3 of 2023.

Kenya Economic Update: 2023, & Cytonn Weekly #10/2023

How agriculture fuelled Kenya’s Q2’2023 GDP growth