Kenya’s economy grew at its slowest pace last year since the Coronavirus pandemic four years ago, hampered by floods, costly bank loans, and disruptions following anti-government protests against the Finance Bill.
The country’s gross domestic product (GDP) - a measure of all economic activity - grew by 4.7 per cent compared to 5.7 per cent the previous year, according to the Kenya National Bureau of Statistics (KNBS).
This was the weakest growth since 2020, when the economy contracted by 0.3 per cent due to shutdowns and travel restrictions to contain the spread of the Coronavirus.
Treasury Cabinet Secretary John Mbadi said the economy had been battered by a raft of challenges, including tight fiscal space, high interest rates, nearly three months of youth-led protests, and floods that damaged infrastructure and destroyed crops.
He added that declining interest rates are expected to support Kenya’s growth this year, which is forecast at 5.4 per cent.
“This slowdown mirrors global trends, where world GDP growth fell from 3.3 percent in 2023 to 3.2 percent in 2024,” said Mr Mbadi.
“Anticipated declines in interest rates are expected to spur private sector credit growth, boost economic activity, and accelerate overall economic performance,” the minister added.
The Central Bank of Kenya has cut its benchmark rate by 300 basis points to 10 per cent, forcing commercial banks to lower borrowing costs and potentially increase the supply of loans.
Growth in agriculture - which accounts for 22.5 per cent of total output and employs over 70 per cent of the rural population - slowed to 4.4 per cent, down from 7.1 per cent in 2023.
The manufacturing sector showed signs of recovery, expanding at 2.8 percent compared to 2.2 percent the year before.
Growth in ICT decelerated to 7.0 per cent from 10.3 per cent, while financial and insurance activities grew by 7.6 per cent, down from 10.1 per cent.
The construction sector contracted by 0.7 per cent in 2024, compared to a 3.0 per cent expansion the previous year, mainly due to reduced public spending on infrastructure projects such as roads. Meanwhile, growth in the transportation and storage sector slowed to 4.4 per cent from 5.5 per cent.
“The contraction was reflected in the decline of key inputs in the construction sector, such as cement and iron and steel imports,” said KNBS.
The overall performance in 2024 would have been worse had growth not picked up in the fourth quarter. The economy expanded by 5.1 percent during that period, compared to revised growth of 4.2 percent in the preceding quarter.
Still, growth in 2025 faces fresh challenges, including US President Donald Trump’s tariff war. Planned spending cuts in the new fiscal year starting 1 July may also weigh on economic momentum.
A slowdown in GDP growth typically means people earned and spent less than the previous year, reducing tax revenues that the government could have used to improve public services such as education, healthcare, and security.
