Growth in Kenya From 2011-2014, Research Paper Example

Comparative analysis of Kenya economic development

Gross domestic product (GDP)

The Kenya’s GDP expanded by four percent in the second quarter of the year 2014. The GDP averaged at 1.32 percent from 2005 to 2014 where it reached an all-time high of 4%. GDP  in Kenya is  reported by Kenya bureau of standards.

Kenya is among the  developed countries in east Africa. Its biggest sector is agriculture that account for about 25%.  Transports and communication, wholesale and retail trade are some of the fast growing sectors of the Kenya’s economy. These two sectors account for about 27% of the total GDP. Manufacturing, this is the third largest sector represent 11 % of the GDP. Other sectors are service, Electricity and water 2.6%, public administration3,7%, mining and fishing 1%. Hotel and hospitality 1.5%

Kenya economy growthrate in the period 2011- 2014

The Kenya’s economy experienced a slowdown in year2011, however,The economy growth rate accelerated in year 2013. The estimated real growth in GDP in the year 2013 accelerated to 3.8%, 4.3% and 4.7% in the first three-quarters of 2013. This growth was primarily driven by financial intermediation, construction and agriculture.

The economy’s short to medium  term forecast is for sustained and raising growth based on : increased in the number of investor, business confidence in the wake of peaceful 2013 election,  stable macroeconomic environment, lower and stable international oil prices, increased rainfall, stable Kenya shilling and governance, justice and security reforms.

The country’s political activities in 2012 to 2014 have mainly centered on the international criminal court(ICC) and the March4 2013 general election. The trial of the country President, Uhuru Kenyatta and his deputy William Ruto and Kenyan journalist continued in Netherlands-based court over this period. Themarch 4 2013 election saw intensive competition between jubilee coalition led by Kenyatta and CORD (collation of reform and democracy) collation led by Kenya’s former prime minister  Raila Odinga. Eventually, the jubilee collation won the election. The election slowed down the GDP growth in the first quarter of 2013.The unemployment rate has slightly increased over this period.

Over the period 2011- 2014, the CPI inflation remained single digit.

In the second quarter of the year 2014, Kenyabureau of statistics revised the 2013 the country’s GDP from 3.8 trillion($42.6 billion) to $ 53.3 billion.  The growth rate in year 2013- 2014, is now 5.7% from 4.7%. This lead to an increase  by 25% of the value of the country’s economy.  The revising exercise involved, one, minor adjustment of the structure of the economy. Two, change of the base year from 2001 to 2009. Some of the notable structural changes of the economy are, information and communication sectors were brought as a separate sector. The quick growth of this sector was as the result of a vibrant industry in the country that has pioneered mobile telephone payment system and exported the ideal across Africa and beyond.  The information and communication technology economy in the country is expected to grow further in the recent years after the commencement of commercial production of oil. The structural changes in the relative price of various patterns of consumption were included.

Changes in accessing agriculture, real estates and manufacturing led to a great rise in DGP.

Construction, manufacturing, financial and insurance, agricultural and miningsectors boosted the growth in first and second quarter of 2014.  Construction sector grew by 18.9% year on year. The manufacturing sector grew by 9.1% year on year. The agricultural output grew by 5.5% per year.  The quarrying and miming surged by 12.1 %. Activities in wholesale and retail grew by 6.8% while activities information and technology grew by 6.4%.

Tourism sector was severely affected by Islamic attacks, restaurant and accommodation contracted by -18.6 % in the first and second quarter of 2014. Based on the debt figures that were released in august 2014, of 2.4 billion shillings after the Kenya heavily oversubscribed Eurobond the debt to GDP   ratio fell from 57% to 50 %. However, this ration is not an indication that the Kenyan government is better off to take more loans. The export growthand dept service capacity, which are more important when it come to capacity to take more loan are not expected to grow substantially in the recent future.

On the positive side, the new GDP implies that the country economic output per capita stands at $ 1200. This places Kenya on the bottom lag of the middle-income status according to the World Bank band ($1045 to $12746). The economist argues that the investors are now more interested in investing in a country with where citizen has more cash to spend. On the negative side, a higher income ranking implies that the country may now not benefit from aid designed for the poorest countries. This new status and bigger economy may not have an immediate impact on the ordinary citizens lives.