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Kenya overtakes Ghana, Tunisia as size of economy climbs by 25%

"Kenya’s economy overtook those of Tunisia and Ghana after the statistics agency "

Source: Bloomberg

Posted on : Tue 30 Sep 2014

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Kenya’s economy overtook those of Tunisia and Ghana after the statistics agency of the Eastern African country overhauled its data to increase the size of gross domestic product by a quarter.

GDP was measured at $55.2 billion last year from $44.1 billion previously, Zachary Mwangi, acting director-general of the statistics agency, told reporters in the capital, Nairobi. That compares with the World Bank’s estimates of $48 billion for Ghana and $47 billion for Tunisia.

Kenya revised its data to take account of expanding industries such as mobile-phone money transfers, telecommunications and informal businesses. It also changed the base year of the GDP figures to 2009 from 2001. The announcement follows a similar exercise in Nigeria earlier this year, catapulting that economy above South Africa’s to become the largest in Africa with a GDP of about $500 billion.

Last year’s growth rate was revised to 5.7 percent from 4.7 percent after the rebasing exercise, Mwangi said.

An increase in the size of GDP will help to lower Kenya’s debt ratios, improving the nation’s ability to borrow. The World Bank and International Monetary Fund have said the move won’t close off Kenya’s access to concessional loans.

Treasury Secretary Henry Rotich said on Sept. 12 the government had cut its 2014 growth forecast to as low as 5 percent from a previous estimate of 5.8 percent, citing a drop in revenue from tourism after a series of gun and grenade attacks.

Spurring Growth

“The GDP rebasing exercise in Kenya will provide a much needed boost to the Kenyan economy as the government tries to spur economic growth in light of the challenges facing its important tourism industry,” Ahmed Salim, a Dubai-based senior associate at risk-advisory group Teneo Intelligence, said in an e-mailed response to questions.

Even after the recalculation, the economy still faces wide economic disparities and social inequalities, he said. Almost four out of 10 Kenyans live in poverty, according to the World Bank. GDP per capita was estimated at $1,246 after the rebasing, according to the statistics agency.

Kenya is the world’s biggest exporter of black tea and it supplies a third of the flowers traded in Europe.

Tanzania, East Africa’s second-largest economy after Kenya, plans to revise its GDP data later this year, which may increase the size of the $33 billion economy by a fifth.

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