Kenya’s gross domestic product (GDP) expanded by 4.9% in the first quarter of 2025, maintaining the same growth rate recorded during the corresponding period in 2024. According to the Kenya National Bureau of Statistics (KNBS), the growth was supported by a broad-based sectoral expansion, with agriculture, mining, manufacturing, finance, and communication services all contributing positively to the overall performance.
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The agriculture, forestry, and fishing sector posted a growth of 6.0%, a development attributed to favourable weather conditions that enhanced both crop and livestock production. KNBS noted that these conditions provided a strong foundation for agricultural output during the quarter. Meanwhile, the mining and quarrying sector experienced a sharp rebound, growing by approximately 10%, driven by increased extraction activities and improved global commodity prices.
According to KNBS data, manufacturing also registered continued improvement, supported by increased production across various sub-sectors. The information and communication sector, while still growing, posted a lower rate of 5.8% compared to the same quarter in 2024. Similarly, financial and insurance activities expanded by 5.1%, which marked a decline from the 9.6% growth reported in Q1 2024.
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The accommodation and food services sector saw the sharpest deceleration, with growth slowing to 4.1% from a staggering 38.1% in the same period last year. Analysts attribute this decline to the fading base effects of the post-pandemic recovery that had significantly boosted performance in 2024.
In a monetary policy move, the Central Bank of Kenya (CBK) lowered its benchmark interest rate to 10% in April 2025, aiming to stimulate credit growth and support domestic economic activity. According to CBK’s Monetary Policy Committee, the decision was influenced by stable inflationary conditions, with inflation averaging 3.6% during the quarter, well within the target range.
The Ministry of Finance has upheld its economic outlook, projecting annual GDP growth of 5.3% for both 2025 and 2026. This forecast reflects optimism about the country’s medium-term recovery trajectory, despite emerging risks.
However, challenges remain. According to the World Bank’s latest economic update, Kenya’s growth forecast for 2025 has been revised downward to 4.5%. The downgrade was attributed to subdued credit expansion in the private sector and tighter lending conditions. In addition, ongoing public debt concerns and external factors, such as global financial market volatility and potential climate-related disruptions pose downside risks to the outlook.
Overall, Kenya’s Q1 2025 economic performance reflects a resilient yet cautiously advancing economy. As noted by both government and international observers, sustained output in key sectors and active macroeconomic management are helping to steady the economy amid ongoing structural and external pressures.
