This archive report was first published on 4 June 2020.
Kenya's private sector activity inched up in May, but the outlook remains bleak as the country grapples with the COVID-19 pandemic. According to a survey conducted by Markit Stanbic Bank Kenya, the Purchasing Managers' Index (PMI) stood at 36.7 in May, higher than the 34.8 recorded in April but still below the 50 mark that separates expansion from contraction.
The survey highlighted a significant decline in output levels in May, with businesses reporting lower activity due to weak sales. Demand levels were further impacted by travel restrictions in Nairobi and Mombasa, which hindered some firms' ability to acquire inputs.
Kenya has been severely affected by the pandemic, with 2,093 confirmed cases and 71 deaths reported by Wednesday. The government has imposed a daily curfew, banned public gatherings, and restricted movement into and out of five regions, including the capital, Nairobi.
Many firms cut jobs in May, while exports fell due to travel curbs and lockdowns in overseas markets. The government has revised its economic growth forecast for 2020 to 3% from 6%, or 2.5% if the crisis worsens. Small and medium-sized businesses are in urgent need of help to survive, with many at risk of closing by the end of the month.
According to Jibran Qureishi, regional economist for East Africa at Stanbic Bank, business conditions have contracted for five consecutive months, and the impact of the pandemic is expected to be felt in the second quarter.
