Kenya's economy shrinks in Q3 2020 as COVID hits tourism

NAIROBI (Reuters) - Kenya’s economy shrank 1.1% year-on-year in third quarter of 2020 compared with growth of 5.8% in the same period in 2019,the statistics office said on Thursday, as the COVID-19 pandemic slashed tourist flows into the country, although agriculture and construction were stronger.

Visitors gather to witness the wildebeests (Connochaetes taurinus) crossing the Mara river during their migration to the greener pastures, between the Maasai Mara game reserve and the open plains of the Serengeti, southwest of Nairobi, in the Maasai Mara game reserve, Kenya August 9, 2020. REUTERS/Thomas Mukoya

The African economy’s performance in 2020 was hit by effects of the COVID-19 pandemic and restrictions that were put in place to contain its spread, forcing many businesses to close and send their employees home.

Accommodation and food service activity crashed 57.9%, a sharp deterioration from 9.9% growth in third quarter of 2019, Kenya’s statistics office said on Thursday.

The sector includes tourism, which has been greatly affected by a drop in visitor arrivals due to COVID-19 restrictions.

“This led to either complete closure of businesses in accommodation and food service sector or significantly scaled down operation,” the statistics office said.

In early December, the tourism ministry said the sector had lost 110 billion Kenyan shillings ($999.55 million) in revenue between January and October.

Some of the more stringent measures that affected the sector, like stopping movement into and out of regions that were initially most affected by COVID-19, and the total closure of bars, have been lifted.

Providing some support, however, the agriculture, forestry and fishing sector grew 6.3% from a 5.0% expansion in the same period in 2019.

“The impressive performance was supported by increases in tea production, exports of fruit and sugarcane production,” the statistics office said.

Construction also picked up, rising 16.2% from 6.6% growth a year earlier.

The economy contracted 5.7% year-on-year in the second quarter of last year, its first quarterly contraction since the global financial crisis 12 years ago.

($1 = 110.0500 Kenyan shillings)

Reporting by George Obulutsa; Editing by Jacqueline Wong and Sam Holmes