NAIROBI, Kenya – Kenya’s economy is projected to grow by 5.4% in 2024, according to the latest forecast from the Central Bank of Kenya (CBK).
This marks a slight deceleration from the 5.6% growth recorded last year despite robust activity in the services sector, strong agricultural performance, and improved export levels.
The outlook is tempered by several global risks, including geopolitical tensions such as the Russia-Ukraine war, the Israel-Palestine conflict, and Red Sea attacks on vessels by Houthi Rebels.
These issues are expected to have significant repercussions on global economies, including Kenya’s.
“The main risks to the global growth outlook relate to further escalation of geopolitical tensions, interest rates remaining higher-for-even-longer in advanced economies, and policy uncertainty attributed to changes of government in some major economies,” CBK Governor Kamau Thugge stated in his post-Monetary Policy Committee statement.
However, the CBK’s CEOs Survey and Market Perceptions Survey, conducted ahead of this week’s Monetary Policy Committee (MPC) meeting, revealed sustained optimism about business activity and economic growth over the next year.
This optimism is largely due to a stable macroeconomic environment characterized by low inflation rates, a stable exchange rate, and continued strong agricultural performance.
“Nevertheless, respondents expressed concerns about the impact of the recent protests on economic activities, high cost of doing business, and potential impact of increased geopolitical tensions on the economy,” Thugge noted.
First quarter GDP data for 2024 shows a 5% growth, driven by strong agricultural performance due to favorable weather conditions and robust activity in the services sector, including wholesale and retail trade, accommodation and food services, financial and insurance services, information and communication, and real estate.
However, growth in the industrial sector, particularly manufacturing and construction, has slowed.
Despite the CBK’s more optimistic projection, the World Bank forecasts a more conservative growth rate of 5% for this year.
The 29th edition of the Kenya Economic Update suggests that ongoing fiscal consolidation efforts and tight monetary policy will temper GDP growth.
Nevertheless, increased investment is anticipated due to restored access to international capital markets, which will boost investor confidence, capital inflows, and more credit availability to the private sector through reduced domestic government borrowing.
The World Bank also identifies recovery in agriculture and tourism, along with deeper regional integration, as key growth drivers.
The economy is expected to grow by at least 5.2% in 2025-26, according to the latest Africa’s Pulse report.
Meanwhile, Kenya’s National Treasury had projected a growth rate of 6.3% for this year, even as the country navigates high interest rates and significant global risks.
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