Kenya Quarterly Gross Domestic Product Second Quarter 2011

The period under review (second quarter 2011) was characterized by a turbulent macroeconomic environment mainly driven by rising inflation and exchange rate depreciation in addition to experiencing less than usual rainfall in most parts of the country. During this period, real Gross Domestic Product (GDP) is estimated to have expanded by 4.1 per cent compared to 4.6 per cent in the same quarter of 2010. Despite the lower than usual rainfall, Agriculture and forestry realized a significant growth of 5.2 per cent during the quarter compared to a growth of 3.0 per cent in the same quarter 2010, mainly driven by horticultural exports. Notable improvements in growths were also witnessed in Construction, and Wholesale and retail trade which recorded growths of 5.8 per cent and 5.7 per cent in the second quarter 2011, compared to 3.6 per cent and 5.0 per cent, respectively, in the same quarter of 2010. High energy costs arising from soaring crude oil and electricity prices coupled with high inflationary expectations curtailed growth of some sectors of the economy. In particular, increased generation of thermal electricity led to a decline in the value added of the Electricity and water sector. The sector declined from a growth of 5.8 per cent in the second quarter 2010, to negative 4.6 per cent in the period under review. The month on month inflation for the second quarter of 2011 averaged at 12.0 per cent compared to an average of 3.7 per cent in 2010 as shown in Figure 2. High food and energy prices, for the better part of the first half of 2011, contributed to the relatively high inflation in the country as compared to 2010.