A Descriptive Analysis of Trade and Balance of Payment in Kenya

Abstract

Kenya’s current account for quite over a long time has experienced deterioration and hence reflecting a deficit. This worsening in the current account balance is as a result of high growth in import merchandise bill relative to export merchandise hence the import-export gap has continued to worsen, the high continuous rise of inflation rate and overall slow economic growth in Kenya. It is however despite the deterioration Kenya marked some significant surpluses the current accounts within the period for some years that is 1977 and 2003. In 1977 the surplus was attributed to the coffee boom and in 2003 it was attributed to decline in imports as receipts from exports increased. The performance of BOP is influenced by a number of factors which among others include; trade balance, terms of trade, competitiveness, domestic money supply, exchange rate, fiscal deficit, economic growth rate, domestic capital formation, inflation rate, net foreign direct investment, capital market, remittances and loans.