Kenya records a timid economic recovery for the first time in six months – PMI

The latest Stanbic Bank’s Purchasing Managers Index (PMI) survey released yesterday shows that trading conditions, although weak, improved, and the market expects economic conditions and business climate to rise in the short to medium term.

It comes after the state and the opposition agreed to engage in talks, creating room for political tranquillity in the country.

According to the report, the PMI index rose to 50.6 from 45.5, hovering above the 50 mark for the first time since January 2023.

“Survey panellists frequently cited that greater political stability led to a recovery in output, particularly in services and manufacturing,” analysts at Stanbic Bank and American analytics firm, S&P Global wrote in the PMI report for August on Tuesday.

“Companies raised output in August, and Job creation accelerated, and purchasing activity picked up, whilst firms grew more confident about their output prospects.”

The report also mentioned that Kenya’s inflation rate decreased to 6.73 per cent in August. This is the first time it has been below seven per cent in 16 months, mainly because food prices are not rising as fast.

One of the reasons for this is that the Kenyan shilling lost about 21.16 per cent of its value against the US dollar from August of the previous year.

Also, in July, the government increased the value-added tax (VAT) from 8 per cent to 16 per cent, which led to higher prices for fuel. These factors combined have caused prices to stay high in a country that imports more than it exports.

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