PUBLISHED ON November 10th, 2014

Kenya trade deficit widens to sh792bn as imports increase

The gap between imports and exports has widened to Sh792.2 billion in the first nine months of the year, defying the downward drift of crude oil prices in the global market. Imports grew 15 per cent over the period to hit Sh1.2 trillion by end of September, eclipsing exports that only grew by 7.5 per cent to Sh409 billion.
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The data by the Kenya National Bureau of Statistics (KNBS) indicates that the trade gap recorded at the end of September is Sh131 billion more than the Sh661 billion in the same period in 2013.

The trade deficit has widened even as the price of crude oil – a key component that accounts for a quarter of Kenya’s annual import bill – continued to drop in the last six months. Crude prices fallen from the upwards of $100 per barrel to an average of $95.89 in September.

“Industrial supplies were one of the main import categories in September 2014 with a share of 24.03 per cent,” KNBS says in its latest Leading Economic Indicators. Capital equipment for industrial and infrastructure development on average accounts for one third of Kenya’s annual import bill.

While increase in orders of crude oil and industrial goods could point to heightened activity in critical segments of the economy like manufacturing and commercial agriculture, the widening trade gap threatens the stability of the shilling.

On the export side, nearly all flagship commodities except coffee – which on average earns Sh22 billion per year – have recorded negative outcomes in the market.

Tea, which nets nearly Sh100 billion every year, has endured significant price fall in the global market since January, causing restlessness in the growing regions. The KNBS data shows that tea prices have fallen from Sh235.77 per kg in January to Sh191.27 per kg at the beginning of September.

Similarly, horticulture, which nets more than Sh80 billion every year, began to attract tariff in Europe after the Economic Partnership Agreement negotiation with the EAC stretched beyond prescribed timelines.

Source: Business Daily

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