This archive report was first published on 4 July 2020.
Kenya's economy showed signs of recovery in June, with business activity improving due to the relaxation of lockdown restrictions in key European cities.
The easing of restrictions in Europe triggered a surge in demand for Kenyan flowers and horticulture exports, leading to a rebound in the private sector.
According to the Markit Stanbic Bank Kenya Purchasing Managers' Index (PMI), the index stood at 46.6 in June, rebounding from May's 36.7 but still below the 50 mark separating expansion from contraction.
Export orders grew for the first time since February, driven by strengthened trade with Europe, while declines in employment and purchasing activity eased.
Input costs decreased for a second straight month, due to salary cuts, leading to back-to-back falls in overall input costs for the first time in the series history.
However, selling prices dropped at a solid pace, but less than in May.
The International Monetary Fund (IMF) has warned that the impact of the global pandemic on Kenya's economy will be severe, with significant fiscal and external financing needs.
"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," said Qureishi.
