Kenya’s trade deficit hit Sh1.11 trillion in the 10 months to October.

This is on the back of higher industrial goods, fuel, and government imports.

Data by the Central Bank of Kenya (CBK) shows the gap between merchandise imports and exports widened by 37.7 percent from Sh807.01 billion in a similar period last year.

This was when low fuel prices and reduced demand for consumer goods kept a lid on imports.

Government Imports

This year, government imports have gone up by 31 percent to Sh63.5 billion.

The State purchases products such as military weapons and vehicles, railway spare parts, drugs, vaccines, and medical equipment.

It also imports food when there is a shortage in the country according to Business Daily.

The county’s total import bill rose by 28.4 percent to Sh1.72 trillion in the period.

Trade Deficit Widens

A widening trade deficit diminishes the country’s foreign currency reserves.

They are used to pay for the imports, and in the process weakening the shilling.

This year, the shilling has depreciated against the dollar by four percent, currently exchanging at 113 units to the greenback.

The economy contracted by 0.3 percent last year.

It however turned around in the first two quarters of 2021 to grow by 0.7 percent and 10.1 percent respectively.

Higher oil prices this year have also pushed up the import bill, as have imports of goods for industrial use as factories return to full-capacity production on the reopening of the economy.

The cost of imports has generally soared globally on persistent disruptions in global supply chains which have increased shipping expenses.

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