Kenya’s economy is projected to achieve 5.3 percent growth in 2025, driven by enhanced agricultural productivity, expanding services sector, and successful implementation of the government’s Bottom-Up Economic Transformation Agenda, according to the African Development Bank.
The African Development Bank’s Country Focus Report revealed that Kenya’s real economic growth reached 4.6 percent in 2024 despite recent macroeconomic challenges, demonstrating the economy’s resilience and the effectiveness of targeted policy interventions designed to stimulate sustainable growth.
The growth projection exceeds the global average of 3.3 percent, reflecting Kenya’s well-diversified economy and sound policy implementation. Enhanced agricultural productivity, driven by improved farming techniques and favorable weather conditions, is expected to contribute significantly to overall economic expansion.
“The strong growth, above the average global growth rate, reflects the impact of sound and deliberate policies as well as the resilience of our well-diversified economy,” stated Kenrick Ayot, senior deputy director at the National Treasury, emphasizing the effectiveness of government economic strategies.
The services sector, particularly financial services, telecommunications, and tourism, continues demonstrating robust performance and is expected to drive economic growth through increased domestic consumption and export earnings. The sector’s contribution to gross domestic product has steadily increased over recent years.
Inflation has declined significantly to 3.8 percent in May 2025 from a peak of 9.6 percent in 2022, creating a more favorable environment for business investment and consumer spending. This dramatic reduction in inflation demonstrates the effectiveness of monetary policy interventions.
The Kenyan shilling has appreciated substantially from Sh159.7 to the US dollar in January 2024 to Sh129.3 by May 2025, improving the country’s import capacity and reducing the cost of foreign debt servicing. This currency strengthening enhances Kenya’s economic competitiveness and investor confidence.
The African Development Bank called for comprehensive reforms to maximize Kenya’s development potential, including broadening fiscal revenue, formalizing the informal sector, deepening financial markets, and enhancing human resource development. These reforms are crucial for sustaining long-term economic growth.
The Bottom-Up Economic Transformation Agenda focuses on empowering grassroots communities and small-scale enterprises, creating employment opportunities, and reducing income inequality. This approach aligns with Kenya’s commitment to inclusive economic development and poverty reduction.
Financial market deepening and improved access to affordable credit are expected to support business expansion and entrepreneurship development. The government continues implementing reforms to strengthen capital markets and attract both domestic and foreign investment.
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