Kenya’s economy is expected to grow in 2025 after a slump in the fourth quarter of 2024. A customer shopping for groceries and food in a supermarket. The Central Bank of Kenya (CBK) projected a real Gross Domestic Product (GDP) growth of 5.4%, supported by various factors. This is below the 4.6% economic growth estimates for the fourth quarter of 2024 by the regulator. Which factors will support Kenya’s economy in 2025 Speaking during a press conference after the Monetary Policy Committee Meeting (MPC) in Nairobi on Wednesday, February 5, CBK governor Kamau Thugge pointed out key factors that will enhance economic growth. “The performance of the economy is expected to pick up in 2025, with real GDP growth projected at 5.4%, supported by resilience of key service sectors and agriculture, expected recovery in the growth of credit to the private sector, and improved exports. This outlook is subject to domestic and external risks,” said Thugge.
Thugge noted that the January 2025 Agriculture Survey showed some moderate upward pressure on overall inflation in the next three months, attributed to higher vegetables and cereals prices due to seasonal factors. Kenya’s inflation The survey also indicated an expectation of stability in pump prices as petroleum products reduce globally. Kenya’s inflation rose to 3.3% in January 2025 from 3% in December 2024, driven by higher prices of food and non-alcoholic beverages. The Kenya National Bureau of Statistics (KNBS) Consumer Price Index (CPI) for January revealed that prices in the food and non-alcoholic beverages category rose by 6.1% while those in the transport category grew by 0.7%. Strong shilling and low interest rates
The CBK CEOs Survey and Market Perceptions Survey revealed improved optimism about business activity and economic growth prospects for the next 12 months. The report attributed the growth to the stable macroeconomic environment reflected in low inflation and stability in the exchange rate, an expected decline in interest rates which is expected to ease access to credit. CBK lowered the Central Bank Rate (CBR) by 50 basis points to 10.75% and reduced the Cash Reserve Ratio (CRR) by 100 basis points to 3.25%. The Monetary Policy Committee (MPC) cited stable inflation, exchange rate stability, and declining global oil prices as key factors in its decision to ease monetary policy.60% of businesses foresee stagnation in employment CBK warned commercial banks to lower their interest rates accordingly or face penalties. The banking regulator’s decision sparked debate among Kenyans, who shared their experiences in accessing credit from their banks
by Wycliffe Musalia
