Kenya’s economy grew by roughly 25% today, when government statisticians decided that its annual output was worth 4.76 trillion shillings ($53.3 billion), instead of the 3.798 trillion shillings it had reported before.
The large jump was as due to a statistical update of GDP data known as rebasing. And although 25% is a big revision, a similar exercise in Nigeria earlier this year showed the economy there was a whopping 89% larger than previously estimated. That rebasing suddenly transformed Nigeria into the largest economy in Africa, surpassing South Africa.
The impact of the Nigerian statistical shift was much larger than Kenya’s because it was far more overdue. Prior to Nigeria’s revamp in April, it had been using 1990 as the base year for which it calculated economic growth. Not only did that mean prices were presented in 1990 terms, but GDP also didn’t properly account for fast-growing industries that developed largely since 1990, such as mobile communications. When Nigeria upgraded its statistics, it chose 2010 as its base year.
For its part, Kenya chose 2009 for its new base year. And it significantly boosted its estimates for a number of sectors of the economy, including communications, real estate, and financial services. It also increased the 2013 growth rate of the economy to 5.7%, up from the previously reported 4.7%.
So what does this mean to your average Kenyan? Pretty much nothing. (For the record, Kenya’s poverty statistics are also out of date, but 2005 numbers showed that roughly 20% of the country lived on less than $1.25 a day.)
The change in numbers merely reflects the government’s view that the economy is actually worth more than previously thought. This is not merely a statistical quirk, as larger GDP figures can make a country more appealing to foreign investors—for one thing, it can make a country’s debt burden look less daunting. It also has implications for eligibility for international aid and lending programs.
Kenya’s economy grew by 25% overnight
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