This archive report was first published on 7 May 2020.
Kenya's economy has been severely impacted by the global coronavirus pandemic, with private sector activity plummeting to a 30-month low in March.
According to the Stanbic Bank Kenya Purchasing Managers' Index (PMI), which tracks business performance in the manufacturing and services sector, the index fell to 34.8 in April from 37.5 in March and 49.0 in February.
The PMI reading of 34.8 is just shy of the record low of 34.4 reported in October 2017, and highlights the significant impact of the virus on business and the economy.
As a result, the Treasury has forecast that the Kenyan economy will grow by as little as one percent this year, compared to a pre-pandemic forecast of about six percent.
"It's safe to say that, at least with anecdotal evidence available so far, the epicentre of the Covid-19 impact on economic activity will be in the second quarter of this year," said Jibran Qureishi, the East Africa economist at Stanbic Bank.
Kenya has so far confirmed 582 cases of Covid-19 and 26 deaths, and the government has imposed restrictions including a nationwide dusk-to-dawn curfew, closure of bars and schools to curb its spread.
The impact of social distancing and restriction of businesses like bars and restaurants has impacted on consumer spending, setting the stage for job cuts and unpaid leave for workers struggling with reduced cash flow.
"Demand from Horeca (hotels, restaurants, eateries and catering) segment has gone to completely zero because there are no parties, no events. However, there's demand from the home segment with people buying from supermarkets, shops and the dukas (kiosks), but this is limited to essentials," said Vimal Shah, the chairman of Bidco Africa.
