Kenya’s GDP is projected to grow by 4.9 per cent in 2025, driven by a sectoral shift from agriculture to construction and financial services, according to Absa Bank.
Absa Bank Senior Economist Phumelele Mbiyo predicts inflation will average 4.5 per cent, with core inflation remaining stable at around 2 per cent since July 2024.
The impact of mild La Niña on food prices is expected to peak in the first quarter and subsequently ease.
These insights were shared at Absa Bank Kenya’s 2025 Economic Forum, a week-long event for customers, industry peers, and financial market stakeholders to discuss macroeconomic trends, financing opportunities, and growth strategies.
Absa Bank Kenya PLC CEO and Managing Director, Abdi Mohamed, emphasized the bank’s commitment to supporting African growth and facilitating policy discussions.
“We are committed to the growth of this continent and the prosperity of our people, and we believe that bringing these kinds of insights is our contribution to the reforms and policy discussions that need to take place in our continent.”
Key economic projections presented at the forum include:
- GDP Growth: 4.9 percent in 2025, with construction and financial services replacing agriculture as primary drivers.
- Inflation: 4.5 percent average, with stable core inflation and easing food price pressures post-Q1.
- Central Bank Rate: Expected to be cut to 9 percent by Q3 2025, stimulating private sector credit.
Sectoral shifts were highlighted:
- Agriculture’s contribution to GDP is declining, impacted by La Niña.
- The construction sector is recovering from a 2022 stagnation.
- The financial services sector is poised for growth due to reduced interest rates.
- The Kenyan shilling is projected to remain stable, supported by strong foreign exchange reserves and international financial inflows.
The stable shilling is attributed to:
- Near-record foreign exchange reserves.
- International financial inflows, including foreign portfolio investment in local bonds.
- Multilateral and bilateral loans.
- Eurobond market access.
The forum provided a platform for bank analysts, financial institutions, importers, exporters, regulators, and market investors to analyze complex financial instruments and explore strategies for navigating market volatility.
