Kenya private sector activity up in June, outlook gloomy -PMI

Kenya's President Uhuru Kenyatta stands for Kenya's national anthem before the Africa Union Peace and Security Council Summit on Terrorism at the Kenyatta International Convention Centre in Nairobi, September 2, 2014. African leaders proposed on Tuesday creating a special fund to combat Islamist militant groups growing in strength from Kenya to Nigeria. African Union (AU) states announced the idea after Nairobi talks on a problem highlighted on Tuesday by capture of a town in north-eastern Nigeria by Boko Haram militants. Fighting killed scores of people, according to security forces, and sent at least 5,000 fleeing. REUTERS/Thomas Mukoya (KENYA - Tags: POLITICS CIVIL UNREST SOCIETY) - RTR44NIT

Private sector activity in Kenya grew in June thanks to reduced curfew hours and the relaxation of lockdowns in Europe that boosted demand for exports, but the outlook for the months ahead remains gloomy, a survey showed last week  Friday.

The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) stood at 46.6 in June, rebounding from May’s 36.7 but staying below the 50 mark separating expansion from contraction.

Kenya has had a daily curfew in place since March to help curb the spread of the novel coronavirus. It shortened the curfew hours in June, providing respite for businesses hit by a shorter working day.

“The rate of downturn eased considerably from May, driven by relaxed curfew measures and a recovery in sales at several businesses,” the survey’s compilers said in a report.

As of Thursday, Kenya had 6,673 confirmed COVID-19 cases, and had reported 149 deaths.

The virus has led to stagnated economic activity, with tourism, horticulture, transport, manufacturing and small and medium-sized businesses hit hardest.

The finance ministry expects economic growth to slow to 2.5% this year from 5.4% last year, while the International Monetary Fund is forecasting a 0.3% contraction this year.

The survey compilers said easing restrictions in some countries in Europe had led to an increase in demand for exports, which also contributed to higher activity.

“A resumption in cargo flights in addition to the gradual re-opening of economies around the world, is underpinning external demand,” said Jibran Qureishi, the head of research for Africa at Stanbic Bank.

“However, the damage done by COVID-19 could last for the better part of the next six months, notwithstanding what official growth statistics may indicate.”


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