On September 30, the Kenya National Bureau of Statistics (KNBS) released rebased GDP figures, which resulted in the estimated size of the economy being raised by 25%. The base year was changed from 2001 to 2009, and in the process, nominal GDP for 2013 was revised to KSh4.76trn ($55.3bn), compared to KSh3.8trn ($44.8bn) previously. The rebasing did not result in an overly dramatic shift in the different sectors’ contribution to GDP. Increased value added by the agricultural, manufacturing, and real estate sectors accounted for most of the upward shift in GDP. Post-rebasing, the agricultural sector now accounts for 29.5% of nominal GDP, compared to 28.9% of GDP prior to rebasing. Meanwhile, the services sector’s contribution was adjusted from 53.9% of GDP to 50.7% of GDP despite a notable upward shift in the real estate sector’s contribution. The manufacturing sector’s contribution increased from 10% of GDP to 11.7% of GDP. The rebasing also resulted in a notable change in real GDP in constant prices, as is shown in the accompanying graph. The growth numbers portray a sharper slowdown in 2008 followed by a more buoyant recovery period.
WHY DO WE CARE? The International Monetary Fund (IMF) representative in Nairobi, Armando Morales, said after the rebasing that the new numbers proved that the government’s reforms are working, and that it ended the puzzle of why economic growth in recent years has not been more robust despite the perception “of a booming economy […] ready for take-off”. The rebasing exercise gives investors a more accurate picture of the size, growth, and structure of the economy. Two notable conclusions from the rebasing are that the agricultural sector remains a crucial contributor to economic growth, and that the manufacturing sector is even more important than was previously believed. These two sectors are critically important in addressing poverty and unemployment. A team from the Fund is due to visit Kenya in October in order to discuss the possibility of an insurance-type assistance programme to cushion the economy against unforeseen external shocks.