NAIROBI, Kenya, Oct 18 – The International Monetary Fund (IMF) has projected Kenya’s economy to expand by 4.8 percent in 2025 and 4.9 percent in 2026, a slight improvement from the 4.7 percent growth recorded in 2024.
According to the IMF’s Sub-Saharan Africa Regional Economic Outlook, the region’s economic growth is expected to remain steady at 4.1 percent in 2025, with a modest pickup in 2026, supported by macroeconomic stabilization and reform efforts in key economies.
“Resource-intensive and several conflict-affected countries continue to face significant headwinds,” the Fund noted.
Data from the Kenya National Bureau of Statistics (KNBS) shows Kenya’s economy grew by 5 percent in the second quarter of 2025, up from 4.6 percent in the same period last year. The growth was driven by agriculture, forestry, and fishing (4.4 percent), transport and storage (5.4 percent), and financial and insurance services (6.6 percent).
Construction and mining also rebounded strongly after contracting in 2024, with construction rising 5.7 percent and mining and quarrying surging 15.3 percent.
Despite the stabilization of public debt ratios in Kenya and Nigeria, the IMF cautioned that the debt-service burden—particularly interest payments relative to fiscal revenues—remains high compared to other regions.
It further warned that increased domestic borrowing poses new risks, as African banks’ sovereign debt holdings are expanding faster than in the rest of the world.
“This bank-sovereign nexus creates a potential feedback loop,” the IMF said.
“Deteriorating sovereign creditworthiness could weaken banks, reduce private credit, and trigger capital outflows and exchange rate pressures, worsening fiscal challenges.”
