NAIROBI, Kenya – Kenya’s economy grew by 4.9 per cent in the first quarter of 2025 — the same pace recorded in a similar period last year — as strong performance in agriculture, manufacturing and construction was offset by a slowdown in key service sectors.
The latest Quarterly GDP Report by the Kenya National Bureau of Statistics (KNBS) shows that while all sectors posted positive growth, sluggish activity in transport, ICT, hospitality, and financial services dragged down overall momentum.
“All sectors of the economy recorded positive growth, albeit at varying magnitudes,” KNBS noted, but acknowledged that the headline figure remained flat due to service sector underperformance.
Service Sector Growth Slows
The transport and storage sector expanded by 3.8%, down from 4.1% in Q1 2024.
Similarly, growth in information and communication dropped to 5.8% from 9.2%, while financial and insurance services cooled to 5.1% from 9.6%.
The most notable deceleration came from accommodation and food service activities, which registered a modest 4.1% growth — a sharp drop from the 38.1% surge recorded last year when the sector was still rebounding from COVID-era disruptions.
Agriculture Leads Production Sectors
Despite the drag from services, production-driven sectors provided a cushion for the economy.
Agriculture, forestry and fishing expanded by 6.0%, up from 5.6% in the same quarter last year, supported by favourable weather patterns across key farming regions.
Manufacturing posted a 2.1% uptick, slightly higher than last year’s 1.9%, while construction rebounded sharply with 3.0% growth — a significant rise from 0.4% in Q1 2024.
KNBS attributes the growth in construction to higher demand for building inputs such as cement and steel.
Cement consumption jumped by 20.3%, from 1.9 million metric tonnes in Q1 2024 to 2.3 million in Q1 2025.
Energy Output Powers Up
Electricity and water supply sectors combined for 3.6% growth, up from 2.8%.
Total electricity generation rose by 5.0%, reaching 3.21 billion kilowatt-hours — bolstered by a rise in renewable energy output.
“Electricity generated from solar and wind increased by 12.5% and 6.3% respectively, signalling progress in Kenya’s clean energy transition,” the report said.
Big Picture: Growth Without Acceleration
While the broad-based growth across sectors is encouraging, economists warn that stagnant overall GDP points to structural weaknesses in Kenya’s services-heavy economy.
The flattening of growth in sectors like finance, ICT and transport — typically considered economic bellwethers — suggests underlying headwinds that may continue to temper recovery unless addressed through policy interventions.
With inflation steady at 3.8% and imports declining for the first time in five years, Kenya’s economy remains on stable footing — but questions persist about the sustainability of growth in the face of global economic pressures and domestic structural challenges.
