The gap between the goods and services that Kenya exported weakened in the 12 months to June this year on account of strong exports and remittances.
The Central Bank of Kenya says the current account deficit narrowed to 4.2 percent of GDP in June 2019 from 5.4 percent, a year ago.
However, the strong performance of the export sector maybe weighed down by the weakening of the local currency which has lost almost 6 percent of its value in the last two weeks.
The CBK weekly report attributes the growth in horticulture export earnings to increased acreage under cultivation, improved market access for produce such as avocados and access to new markets such as China.
CBK further says high remittance inflows from Kenyans living abroad also boosted Kenya’s account deficit position.
In the year to June 2019, a total of 282 billion shillings was sent home by Kenyans living or working in the Diaspora.
In the 12-months to April, horticulture earnings stood at 107.6 billion shillings up from the 96.4 billion shillings that the sub-sector earned in the same period last year.
CBK further says tourism earnings boosted Kenya’s performance.
The current account deficit has plunged from a high of 6.7 percent in 2015 to 5.0 percent in 2018.
Last week, CBK governor said the bank expects the current account deficit will stand at 4.8 percent by the end of the year.
However, the improved current account deficit is likely to come under severe pressure to the weakening position of the Kenyan shilling.
The local currency has weakened against all major currencies in the last two weeks.
It closed the week weaker against the US dollar, the UK pound and the Euro