This archive report was first published on 5 June 2020.
As of May, Kenya's private sector was reeling from the effects of the coronavirus pandemic, with a significant decline in activity and demand reported by a Stanbic Kenya survey.
The Purchasing Managers Index (PMI), a key indicator of business conditions, stood at 36.7 in May, a slight improvement from April's 34.8, but still a far cry from the 50.0 threshold that signals an improvement in business conditions.
According to Regional Economist for East Africa at Stanbic Bank, Jibran Qureishi, business conditions have worsened in each month of 2020 so far, with the latest deterioration marked by historical standards.
"Driving the downturn was a considerable fall in output levels in May, as businesses reported lower activity due to weak sales. Demand levels were again impacted by travel restrictions around Nairobi and Mombasa, which meant some firms were unable to acquire inputs," the report noted.
Qureishi also highlighted that "We still expect the epicentre of Covid-19 to be felt in Q2, with respect to economic activity. Business conditions have contracted for five consecutive months now," underscoring the severity of the situation.
The virus has had a devastating impact on Kenya's economy, particularly on the tourism and horticulture sectors, which are the leading sources of foreign exchange. As a result, the central bank has confessed that Kenya's small and medium enterprises need urgent financial aid to cushion their operations from the virus.
With 2,093 confirmed coronavirus cases and 71 deaths by Wednesday, Kenya has imposed a daily curfew, banned public gatherings, and controlled movement in and out of the nation in an effort to curb the spread of the virus.
According to Bloomberg News, the government has cut its economic growth forecast for 2020 to 3 per cent from 6 per cent, or 2.5 per cent if the crisis worsens, underscoring the severity of the economic impact of the pandemic.
