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Private sector activity in Kenya tumbled in March as the global coronavirus pandemic hammered consumer demand and forced businesses to reduce their operations and staffing levels according to a new report – marking the second-lowest in the survey’s history.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) for manufacturing and services plunged to 37.5 in March from 49.0 in February. Readings above 50.0 indicate growth.
“Kenyan firms saw a marked drop in business activity during the month, which was widely linked to the impact of the COVID-19 pandemic on consumer demand,” the data compilers said in their survey report, adding that “Many surveyed businesses noted that worries surrounding the virus meant that customers cancelled or reduced new orders, leading to a steep fall in total sales that was the second-sharpest on record.”
Kenya has 110 confirmed coronavirus cases, with three deaths. It has imposed a daily curfew, banned public gatherings and asked people to stay at home during the day unless it was absolutely necessary to go out for work or other essential activities.
Last week, the central bank cut its 2020 economic growth forecast to 3.4% from 6.2% as the outbreak slashes demand from Kenya’s trading partners, disrupting supply chains and local production.
Tourism and horticulture, two leading sources of foreign exchange for Kenya, have been hit hard.
“Arguably, there will be a notable impact on economic output this year as supply chains globally are disrupted and negative demand shocks are felt,” Jibran Qureishi, regional economist for East Africa at Stanbic Bank, said.
“The longer the duration, the more acute or severe the impact will be.”