“The second quarter figures that came out yesterday were not as good as expected. First quarter numbers showed about 5.2 per cent. It wasn’t just us, I think most of the market was looking for around five and a half or six per cent growth in Kenya this year. Then the second quarter figures came out and instead of being an improvement on the already good first quarter figures, they showed a slowdown to 4.3 per cent,” Renaissance Capital global chief economist Charlie Robertson told CNBC Africa on Wednesday.
“What was missing was investment. The government has spent a lot of money on finishing the Thika highway ahead of the elections. After elections that slowed down, we thought the private sector would start lending money to start investing to help dive growth, and they didn't really do that in the second quarter.”
Robertson added that the downgrade on GDP growth for the country was now at five per cent from 5.6 per cent previously. In the second quarter, Kenya’s current account deficit worsened by 50 per cent after standing at 95 billion shillings.
“That’s where we’d hoped to see some improvement. Tourism numbers were quite weak early this year, they were 18 per cent down in the first quarter, and about 12 per cent down over the first half, and I think that was election related,” Robertson explained.
“There was quite a lot of concern in the foreign media that we could see a re-run of 2007 and 2008. It’s not what Renaissance Capital believed, it’s not what the financial markets believed but it’s what a lot of people were told. Tourism numbers fell a lot, we were hoping for that to get much better in the second half.”
A jump in inflation from a low of 4.3 per cent in the first quarter to 8.29 per cent currently has added to the negative outlook. Despite the poorly performing economy, Robertson was positive that tourism figures would be recovered once the the Westgate Mall terrorist attack investigation is complete.
“The terrorists never win in the long run. The tourists always do come back and it’s been a very positive trend in Kenya for the last few years. That trend will return but for one year, the numbers look much worse,” he said.