In January, Kenya’s private sector showed modest growth for the fourth month, with the PMI slightly falling to 50.5. Forecasts indicate a slowdown in growth to 4.6% for 2024, with inflation rising to 3.3%. Economists noted slower increases in import prices while predicting easing inflation pressure.
Kenya’s private sector continued to experience growth for the fourth consecutive month in January, although the expansion showed signs of slowing compared to December. The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) recorded a slight decrease to 50.5, down from 50.6 in the previous month. Values above 50.0 signify growth, indicating an ongoing but modest recovery in economic activities.
The country’s finance ministry has projected a slowdown in economic growth to 4.6% for 2024, a decrease from 5.6% in 2023, while also expressing optimism for a rebound later this year. Concurrently, inflation increased to 3.3% year-on-year in January, rising from 3.0% recorded in December, as reported by the statistics office.
Economists noted a rise in purchase prices for imported goods in January, albeit at a slower rate than the previous month, primarily due to elevated taxes. “Output prices increased but less briskly,” stated Christopher Legilisho, an economist at Stanbic Bank. Despite the price increases, a slight easing of inflationary pressure was anticipated for January compared to December.
The Purchasing Managers’ Index (PMI) is a key economic indicator measuring the activity level of purchasing managers in the manufacturing and services sectors. A PMI reading above 50 indicates expansion, while readings below that point suggest contraction. For Kenya, the PMI offers insights into the overall health of the private sector, serving as a barometer for economic performance and enabling analysts to anticipate trends in growth and inflation. In recent years, Kenya has faced various economic challenges, including inflation and taxation impacts on businesses. The government’s growth revision reflects broader economic conditions, highlighting the resilience and challenges faced by Kenyan businesses in a dynamic economic environment. Understanding these dynamics is crucial for policymakers and stakeholders engaged in economic planning and business strategy.
In summary, Kenya’s private sector growth experienced a modest expansion in January as reflected by the slight dip in the PMI. Projections from the finance ministry suggest a decrease in economic growth, coupled with rising inflation rates. Increased purchase prices indicate ongoing economic pressures, although a slight reduction in inflationary momentum is expected moving forward. Overall, the outlook remains cautious amid these economic indications.
Original Source: www.marketscreener.com
