What New Report Say About Kenya’s Economy

Despite facing challenges, Kenya’s economy is projected to grow steadily in 2025, according to Cytonn Investment’s latest market outlook.

The investment firm has forecasted a GDP growth rate of 5.0 per cent to 5.4 per cent, driven by key sectors such as agriculture, services, and tourism.

These sectors are expected to lead the charge in expanding the country’s economic output, particularly, the agricultural sector is anticipated to be a major contributor to growth, alongside a rebound in business activity across various industries, including information technology and hospitality.

This resurgence in business activity is likely to be further supported by a recovery in Kenya’s tourism sector, with the country’s continued popularity as a travel destination serving as a strong boost.

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However, Cytonn remains cautious, noting several risks that could impact the country’s economic trajectory.
Among the concerns highlighted in the report are the rising public debt and potential inflationary pressures, which could undermine the overall economic stability.

“The primary risk to this growth outlook is the looming danger of debt distress and the possibility of increased inflationary pressures,” the report states.

Cytonn also warned that inflation could rise in 2025, with the annual average forecasted to hit 5.3 per cent, a slight increase from 2024’s rate of 4.5 per cent.

Although the inflation rate is expected to stay within the government’s target range of 2.5 per cent to 7.5 per cent, inflation remains a critical risk factor.

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Kenya’s inflation rate saw a slight increase in December 2024, rising to 3.0 per cent from 2.8 per cent in November.

Despite this, inflation remained within the central bank’s target range, with food price hikes and transportation costs driving the recent uptick, even as the shilling showed signs of stabilization.