Kenya’s economy grew 4.6 percent in 2025, slightly below government expectations and marginally down from the previous year, as the East African nation navigated weak global conditions and rising external risks, official data showed Wednesday.
The Kenya National Bureau of Statistics said growth was broad-based, supported by gains in agriculture, construction, and mining and quarrying, even as households and businesses faced higher costs linked to global commodity price volatility.
The figure compares with 4.7 percent growth in 2024 and falls short of the finance ministry’s February projection of 5.0 percent for the year. Officials said the economy remained resilient but warned that external shocks could continue to weigh on performance in the near term.
In its annual economic survey, the statistics agency also forecast growth of 4.9 percent in 2026, suggesting a modest improvement but still below the levels needed to significantly accelerate job creation in one of Africa’s largest economies.
Kenya’s economic performance comes against a backdrop of heightened global uncertainty, including disruptions linked to geopolitical tensions in the Middle East. The report specifically cited the spillover effects of the war involving Iran as a risk factor for Sub-Saharan Africa, particularly through energy markets.
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“Sub-Saharan Africa remains highly vulnerable to shocks stemming from global conflicts and commodity price fluctuations,” the agency said.
Kenya is heavily dependent on imported fuel and other energy products, making it sensitive to changes in global oil prices. Any sustained increase in energy costs tends to filter quickly into transport, food prices and manufacturing inputs, placing pressure on inflation.
Recent developments in global energy markets have already prompted concern among policymakers, with supply chain disruptions threatening the availability of essential goods. The statistics bureau warned that the current geopolitical environment could further strain import costs and external balances.
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Agriculture remained one of the key drivers of growth in 2025, supported by improved weather conditions and government-backed initiatives aimed at boosting productivity. Construction activity also contributed to expansion, reflecting ongoing infrastructure development in both urban and rural areas.
Mining and quarrying recorded gains as demand for minerals remained steady, although analysts caution that the sector remains exposed to global price cycles. Manufacturing growth was more subdued, reflecting high input costs and constrained consumer demand.
The services sector, which accounts for a large share of Kenya’s output, continued to expand but at a slower pace than in previous years. Financial services, retail trade and transport all posted moderate gains, though businesses reported pressure from higher operating costs.
Despite the steady overall growth, economists say Kenya’s expansion remains below the level needed to significantly reduce unemployment, particularly among young people. Structural challenges, including a large informal sector and limited industrial diversification, continue to constrain faster growth.
The government has sought to address these issues through reforms aimed at improving tax collection, expanding infrastructure investment and attracting foreign capital. However, fiscal constraints and rising debt servicing costs have limited policy space.
The finance ministry had earlier projected stronger growth of 5.0 percent for 2025, but the latest figures suggest that momentum has been weaker than expected.
Analysts say Kenya’s economic trajectory will depend heavily on external conditions, particularly energy prices and global trade stability. As a net importer of fuel, the country remains vulnerable to shocks originating far beyond its borders.
Looking ahead, policymakers are expected to focus on managing inflation risks while supporting growth in key productive sectors. The central bank has previously warned that global volatility could complicate monetary policy decisions in the coming months.
For now, Kenya’s economy continues to expand at a moderate pace, but officials acknowledge that sustaining higher growth will require greater resilience to external shocks and deeper structural reforms at home.
