Kenya’s first quarter current account deficit narrowed by 24.33% q/q to KES101.5bn ($1.0bn), mainly thanks to smaller trade gap coupled with increased secondary income surplus, data from Kenya National Bureau of Statistics (KNBS) showed.
Compared to the same period last year, the shortfall was by 59% higher in Q1, reflecting higher trade and primary income deficits and smaller services surplus.
We estimate the Q1 current account gap at 1.8% of the projected GDP for the fiscal 2014/15 (to end-June), compared to a deficit of 2.3% of GDP in Q4.
The country’s merchandise trade gap (fob/fob) narrowed 22% q/q to KES202.6bn in Q1 as exports rose 2.6%, whereas imports plunged 14%. On a y/y basis, the trade shortfall grew 10.8% as exports fell 2.2% and imports rose 5.3%.
Kenya’s gross official reserves narrowed by KES15.7bn during the quarter, following an increase by KES19.6bn in Q4, probably reflecting the central bank’s interventions through sale of foreign exchange to commercial banks to support the weakening shilling.
| KES bn | Q1 2015 | Q4 2014 | Q1 2014 | q/q | y/y |
| CURRENT ACCOUNT BALANCE | -101.5 | -134.1 | -63.8 | -24.3% | 59.1% |
| Trade balance | -202.6 | -260.2 | -182.9 | -22.1% | 10.8% |
| -exports of goods (fob) | 131.5 | 128.2 | 134.5 | 2.6% | -2.2% |
| -imports of goods (fob) | 334.2 | 388.4 | 317.4 | -14.0% | 5.3% |
| Services balance | 23.7 | 66.9 | 50.3 | -64.6% | -52.9% |
| Primary income | -9.3 | -14.2 | -7.2 | -34.0% | 29.9% |
| Secondary income | 86.8 | 73.4 | 76.0 | 18.2% | 14.2% |
| -diaspora remittances | 33.3 | 32.9 | 29.4 | 1.3% | 13.2% |
| CAPITAL ACCOUNT | 2.5 | 0.6 | 0.3 | 340.3% | 818.8% |
| FINANCIAL ACCOUNT | -219.3 | -161.6 | -75.7 | 35.7% | 189.7% |
| Change in gross official reserves | -15.7 | 19.6 | 8.1 | -180.1% | -293.8% |
| Source: KNBS |
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