The International Monetary Fund (IMF) expects Kenya’s economy to grow at a slower pace this year, but sees inflation remaining stable despite uncertainty over the sweeping US tariff measures.
The IMF projects that Kenya’s GDP will grow by 4.8 percent in 2025, which would be 0.2 percentage points lower than the five percent growth rate forecast in October 2024.
Inflation is, meanwhile, expected to remain stable and below the five percent target set by the National Treasury.
The average inflation rate in 2025 has been set at 4.1 percent in 2025, down from a previous projection of 5.1 percent.
The lowered economic growth forecast for Kenya in 2025 is part of wider pessimism about global growth, as countries continue to assess the direct and indirect impact of US tariffs.
“The downgrades are broad-based across countries and reflect in large part the direct effects of the new trade measures and their indirect effects through trade linkage spillovers, heightened uncertainty, and deteriorating sentiment,” the IMF said in its April 2025 World Economic Outlook (WEO) report published on Tuesday.
“The growth impact of tariffs in the short-term varies across countries depending on trade relationships, industry compositions, policy responses and opportunities for trade diversification.”
The IMF does not, however, expect the global economy to slide into a recession this year, and instead projects a growth rate of 2.8 percent—albeit a downgrade from 3.3 percent in October last year.
The growth rate stands above the two percent benchmark, under which the Fund deems the global economy to be in contraction.
IMF’s revised global growth outlook comes as policymakers and market participants continue to debate the impact of the 10 percent tariff imposed on Kenyan exports to the US.
The direct impact of the US tariffs is seen as mild, but the indirect consequences are seen as deeper and more devastating to growth prospects.
The Central Bank of Kenya (CBK), for instance, described the impact of President Donald Trump’s tariffs on Kenyan exports to the US as immaterial, despite fears of a global recession.
The apex bank said exports were likely to fall by just Sh12.9 billion ($100 million), despite warnings from economists that the impact of the 10 percent tariff would be more far-reaching.
“In the extreme case, if that does not change, we expect the 10 percent tariff to have an impact of reducing our exports to the US by $100 million,” CBK Governor Kamau Thugge said earlier this month.
“It is relatively small compared to our GDP, which is north of $122 billion (Sh15.83 trillion). We also don’t expect that the $100 million hit would have any significant impact on the overall balance of payments and the exchange rate,” he added.
