Kenya’s economy is expected to grow by 4.8 per cent in 2025, according to the Parliamentary Budget Office (PBO).
The figure by PBO is a more cautious outlook compared to the 5.3 percent growth forecast by the National Treasury for the same period.
In a report submitted to the Budget and Appropriations Committee, the PBO warned of both domestic and global downside risks that could weigh heavily on Kenya’s economic performance in the coming year.
“On the external front, the potential spillover effects of protectionist trade policies in the global economy are likely to weigh on domestic economic performance through trade and financial channels,” the PBO report stated.
The PBO pointed to the increasingly volatile global trade environment, particularly the escalation of trade tensions between the United States and its major partners, driven by a new wave of tariff impositions.
These tensions, the report noted, are expected to slow growth in the U.S. due to weaker-than-expected consumer spending—effects that may ripple across emerging markets like Kenya.
Domestically, the PBO highlighted that Kenya’s growth remains heavily reliant on the timely and effective implementation of the Bottom-Up Economic Transformation Agenda (BETA), particularly in the agriculture, industry, and services sectors.
“In particular, the agriculture sector remains vulnerable to variations in weather patterns, which could affect productivity,” the report noted, adding that erratic weather conditions due to climate change could hinder food security and rural incomes.
Additionally, the PBO expressed concern about Kenya's limited fiscal space for public investment, warning that tight budget constraints could hamper infrastructure development and other long-term growth drivers.
The PBO acknowledged that recent improvements in credit uptake, supported by the easing of monetary policy by the Central Bank of Kenya, are expected to stimulate economic activity.
This credit growth is likely to support private sector expansion and consumption.
The National Treasury’s outlook is more optimistic, projecting a 5.3 percent economic rebound in 2025.
In its recent public statements, Treasury officials attributed the expected growth to a strong agricultural performance, a resilient services industry, improved macroeconomic stability, and continued public investment in infrastructure and social programs under the BETA framework.
The Treasury is banking on a recovery in rainfall patterns and expanding government-funded agricultural interventions to boost food production and lower inflation, thereby encouraging domestic consumption and investor confidence.
