The Kenya Economic Survey 2025, released in the first week of May by the Kenya National Bureau of Statistics (KNBS), indicates that the Kenyan economy is growing at 4.7%, significantly below the 5.7% growth achieved last year. Global GDP grew by 3.2% in 2024, with emerging markets (4.2%) outperforming developed ones (1.7%), while Sub-Saharan Africa expanded by 3.8%.  The slowed growth does not bode well for Kenya, particularly when compared to the East African growth rate of 5.4%. Therefore, Kenya underperformed in the region. 

Formal employment accounted for only 10% of the 782,300 new jobs created in 2024. So, while more people were employed, they are mainly working in low-paying and unregulated jobs. Formal employment remains low at 16.4% of total employment.

Inflation dropped to 4.5% from 7.7% in 2023, providing relief for households as prices rose more slowly. The prices of sugar and cereals dropped sharply, while those of vegetables and fish increased.  The shilling strengthened slightly to KSh 134.8/USD from KSh 139.8/USD. This eased inflation, and currency stabilisation helped boost purchasing power and reduce import costs, as a weak shilling is not conducive to importation.

Government spending is now at 26.4% of GDP, up from 22% a year earlier, giving credence to Kenyans’ concerns about the high debt ratio. National spending increased by 12%, primarily due to recurrent expenditures, and counties are following a similar trajectory. This means that infrastructure development is lagging.  Revenue remained stable at 20% of GDP, while net borrowing was at -6.3% of GDP. Kenya is therefore spending more than it earns, underspending on infrastructure, and is becoming increasingly reliant on borrowing, which is a risky long-term strategy. 

The export-import cover ratio improved to 41.1%, up from 38.6%, while remittances reached KSh 674.1 billion, providing a much-needed lifeline to the economy, surpassing forex from tea and horticulture exports. Kenya, therefore, imports more than it exports; however, the remittances help the country with its foreign exchange. 

A look at economic sectors points to gains in the agriculture and digital services sectors. Agriculture yielded mixed results, with a 14.1% decline in horticulture exports due to rejection by EU markets, and a 6.1% decrease in maize production attributed to erratic rains. Whereas sugarcane production rose by 68.7%, milk, coffee, and tea saw modest gains. 

Petroleum prices fell by 8.1% due to lower global prices; however, imports increased by 21%. Kenya heavily relies on renewable energy sources, making it a more secure and environmentally friendly energy source. Universal health coverage was introduced with the establishment of the Social Health Authority, which registered 16.9 million people. Cement consumption and construction costs fell, affecting manufacturing in the country. The Education budget remains high, but the universities’ fund fell by over 50%.  71.4 million mobile transactions, totalling KSh 21.9 trillion, were conducted, but there has been an increase in digital crime. 

Overall, the 2025 Economic Survey revealed resilient but muted growth, characterised by a spending pattern that prioritised recurrent expenditure at 86.1%, which hinders overall growth and long-term economic transformation. A high wage bill without capital investment will not generate future revenues. Lower credit in the manufacturing sector also impacted the sector’s performance, which grew by only 2.8%. The industry remains agro-processing mainly and low-value assembly. According to the 2024 Global Innovation Index, Kenya ranked 118th in the category of human capital and research, and 106th in Infrastructure, further cementing the picture drawn by the Economic Survey. These two categories were the worst-performing categories in the index, indicating that they significantly hinder Kenyan innovation. 

In other words, manufacturing is not driving structural transformation in the country, and Kenya is trapped in a jobless growth cycle characterised by modest GDP growth, without industrial deepening, export diversification, or a shift in labour to formal, productive jobs. The country’s structure, therefore, remains fragile, consumption-driven, and vulnerable to volatility, and it will continue to be so without serious policy efforts to reverse this state of stagnation.  

Fact Sheet 

•         Good

o    Inflation is down.

o    Jobs are growing, mainly in informal settings.

o    Agriculture and services are leading the recovery.

o    The digital economy is expanding fast.

o    The external trade position is improving slightly.

•         Bad

o    Growth is slowing.

o    Formal job creation is still weak.

o    Construction and manufacturing are underperforming.

o    Heavy government spending on salaries, not development.