DatalytIQs Academy

Kenya’s Economic Landscape 2025: A Deep-Dive Analysis of the KNBS Economic Survey

Written by

Collins Odhiambo

in

The KNBS Economic Survey 2025 provides a clear, data-driven view of how Kenya performed economically in 2024, covering growth, employment, inflation, trade, fiscal policy, and sectoral performance. The numbers tell a story of resilience amid global headwinds, but also of structural vulnerabilities that demand reform.

Macroeconomic Performance at a Glance

Indicator 2023 2024 Change Interpretation
Real GDP Growth 5.7% 4.7% ↓ –1.0 pp Growth slowed due to mixed weather and weaker manufacturing.
GDP (Current Prices) KSh 15.0 Trillion KSh 16.2 Trillion ↑ +8.0% Nominal growth steady; economy expanding in size and scope.
Inflation (CPI) 7.7% 4.5% ↓ –3.2 pp Inflation was contained via improved food supply and stable fuel prices.
CBR (Policy Rate) 12.5% 11.3% ↓ –1.2 pp CBK eased slightly after tightening to curb 2023 inflation.
Exchange Rate (KES/USD) 139.8 134.8 ↑ +3.6% The shilling stabilized on reduced import demand and higher remittances.
GDP Per Capita KSh 291,769 KSh 309,460 ↑ +6.0% Real income per person improved modestly.

Interpretation:
Kenya’s macroeconomic fundamentals remained stable — low inflation, modest growth, and a narrowing trade deficit — despite global volatility. Fiscal ratios improved, but public debt remains high relative to GDP.

Fiscal and Monetary Trends

Fiscal Indicator 2023/24 2024/25 Trend
Revenue as % of GDP 20.0% 20.0% Steady
Expenditure as % of GDP 26.4% 26.4% High, driven by debt service
Net Lending/Borrowing as % of GDP –6.3% –6.3% Persistent fiscal deficit
VAT Collections (2024/25) KSh 0.7 Trillion ↑ Main revenue source
Public Debt Transactions KSh 703 Billion ↑ Reflects high debt service load

Interpretation:
Fiscal consolidation remains slow. Kenya’s expenditure still outpaces revenue, primarily due to debt repayments and social spending. Maintaining a primary surplus remains key for medium-term debt sustainability.

External Sector and Trade

Indicator 2023 2024 Trend
Total Trade KSh 3.62 Trillion KSh 3.82 Trillion ↑ +5.5%
Exports (FOB) KSh 906.3 B KSh 932.1 B ↑ +2.9%
Imports (CIF) KSh 2.61 T KSh 2.71 T ↑ +3.6%
Trade Balance –KSh 1.60 T –KSh 1.59 T ↔ Slight improvement
Export-Import Ratio 38.6% 41.1% ↑ Better coverage

Top Exports (2024):

  • Tea – KSh 203.6B

  • Horticulture – KSh 189.1B

  • Apparel – KSh 56.8B

  • Coffee – KSh 38.4B

  • Edible Oils – KSh 30.3B

Top Imports (2024):

  • Petroleum products – KSh 552.4B

  • Machinery – KSh 312.9B

  • Fats and Oils – KSh 139.2B

  • Plastics and Iron/Steel – KSh 113.4B, 101.8B

Interpretation:
Kenya’s export sector is recovering, with tea and apparel leading growth. However, reliance on imported energy and machinery continues to weigh on the balance of trade.

Sectoral Performance Snapshot

Sector 2023 Growth 2024 Growth Observation
Agriculture 7.1% 4.4% Slowed due to maize declines; tea, sugarcane, and rice improved.
Manufacturing 2.2% 2.8% Gradual rebound from supply shocks.
Construction 2.9% 2.8% Slight slowdown; credit to the sector declined.
Services (Overall) 5.3% 5.5% Led GDP growth through trade, ICT, and finance.
Tourism +19% arrivals +14.7% arrivals Strong recovery post-pandemic.
Energy Generation 13,400 GWh 14,100 GWh ↑ +5.1% from new hydro and geothermal capacity.

Employment, Earnings, and Wages

  • Formal sector employment grew 2.4% to 3.4 million jobs (2024).

  • Private sector wage bill: KSh 2.1 trillion (+7.3%).

  • Public sector wage bill: KSh 881 billion (+5.8%).

  • Informal employment: Dominates at 83.6% (17.4 million workers).

  • Annual inflation: 4.5% — real wages remain nearly flat.

Implication: Job creation remains slower than population growth. The informal sector continues to absorb the majority of new labor entrants.

Policy Interpretation & Economic Lessons

Monetary and Fiscal Coordination

  • CBK’s cautious stance effectively contained inflation without suppressing growth.

  • Fiscal policy, however, remains expansionary, increasing pressure on interest rates.

External Sector

  • The slight improvement in the balance of payments (–KSh 208.9B) reflects higher remittances and service exports.

  • Need for export diversification beyond traditional commodities.

Industrial Policy

  • Manufacturing’s 2.8% growth signals recovery but is still below Vision 2030 goals (10% GDP share).

  • Incentivizing local production and reducing input costs through energy and transport reforms are key.

Agriculture and Climate

  • Crop diversification and irrigation investment are crucial to mitigate rainfall dependency.

  • The sharp 68.7% jump in sugarcane output shows potential for domestic value addition.

Digital & Financial Transformation

  • ICT output reached KSh 701 billion, driven by mobile money transactions worth KSh 21.9 trillion — a core driver of financial inclusion.

  • Kenya remains a regional fintech leader, but must strengthen cybersecurity, as online crimes surged in 2024.

Outlook: 2025–2026

Indicator Projection Trend
GDP Growth 5.1–5.4% Stable recovery led by services and construction.
Inflation 4.2–4.8% Within the CBK target range.
Exchange Rate KES 155–158/USD Expected mild depreciation.
Trade Deficit ~KSh 1.55 Trillion Gradual narrowing.
Fiscal Deficit 5.3% of GDP Slowly improving.

Conclusion

Kenya’s 2025 Economic Survey shows a maturing, stabilizing economy.
Growth has slowed but remains broad-based, inflation is controlled, and structural reforms are starting to yield results. The challenge now lies in translating macro stability into inclusive growth — tackling poverty, joblessness, and inequality while fostering investment-led productivity.

DatalytIQs Academy Insight

Students of Macroeconomics, Fiscal Policy, and Development Economics can use this report to:

  • Conduct time-series GDP growth and inflation trend analysis.

  • Apply Keynesian and monetarist frameworks to interpret fiscal-monetary coordination.

  • Model sectoral elasticity of GDP using KNBS data.

  • Develop policy case studies on trade diversification and fiscal consolidation.

Comments

Leave a Reply

More posts