Kenya’s economy is set to experience a positive growth trajectory in 2025, with the National Treasury projecting a 5.3% expansion, a notable increase from the 4.6% growth anticipated in 2024. The projection, outlined in the Treasury’s Budget Policy Statement for 2025, reflects an optimistic outlook for the nation’s economy, despite challenges faced in recent years.
The Treasury highlighted that Kenya’s economy contracted in 2024, primarily due to a slowdown in economic activities during the first three quarters of the year and a decrease in private sector credit growth to key sectors. However, the projected growth in 2025 signifies a recovery, driven by improvements in agricultural productivity and the resilience of the services sector.
Agriculture, a vital sector in Kenya’s economy, is expected to play a central role in this recovery. With favorable weather conditions and government interventions aimed at boosting productivity, agricultural growth is projected to average 3% in 2025. This development comes at a crucial time, as agriculture remains one of the main contributors to Kenya’s GDP and employment.
In addition to agriculture, Kenya’s services sector is expected to remain robust, with a growth rate of 6.6% over the medium term. Key sub-sectors, including ICT, financial services, healthcare, and public administration, will continue to benefit from ongoing reforms. The ICT sector, in particular, is anticipated to drive growth in these industries, fostering innovation and improving service delivery across various sectors of the economy.
Tourism, an important contributor to Kenya’s foreign exchange earnings, is also expected to see growth in 2025. The government’s efforts to revitalize the tourism sector, including promoting international conferences, cultural festivals, and wildlife safaris, will likely result in a boost to both domestic and international tourism revenues.
On the domestic front, consumption is projected to remain strong, with aggregate domestic demand expected to average 87.4% of the GDP in 2025. Easing inflationary pressures will provide households with more disposable income, supporting continued consumer spending.
Treasury Cabinet Secretary John Mbadi emphasized that the government will focus on fiscal consolidation to reduce public debt vulnerabilities. This strategy aims to create fiscal space to fund essential public services and infrastructure while ensuring economic stability in the coming years.
As Kenya moves into 2025, the combination of agricultural growth, a resilient services sector, and strategic fiscal policies are set to steer the economy toward a stronger and more sustainable future.
