NCBA Group forecasts that Kenya’s economy will expand by 5.0% in 2025, driven by stronger private sector credit, stable inflation, and increased government spending.
This optimistic outlook was the highlight of the NCBA Economic Forum, a gathering of policymakers, economists, and industry leaders. They convened to discuss strategies for enhancing Kenya’s economic resilience amidst a shifting global landscape.
NCBA Group Managing Director, John Gachora, stated the outlook for 2025 remains “positive despite global uncertainty.” He emphasized that Kenya must maintain “pragmatic policy coordination and efficiency in public spending” to achieve sustainable growth.
Mr. Gachora noted that the global economy is expected to sustain its growth, expanding at about 3.2% in 2025, slightly down from 3.3% in 2024. Kenya’s projected performance, he added, demonstrates its resilience against tight global financial conditions and trade disruptions. However, he cautioned that slower growth in major economies like the US and key Asian markets could negatively impact Kenya’s exports and remittances in 2026.
Kenya’s current growth model, which relies on public expenditure, agriculture, and a resilient services sector, faces significant pressure from high public debt service costs. Mr. Gachora highlighted a critical fiscal constraint: the government spent Ksh. 509 billion on debt service in the first quarter of the 2025-2026 fiscal year, consuming nearly all (Ksh. 554 billion) of the total tax collected. This, he stressed, limits the fiscal space available for crucial development initiatives, making efficiency in public spending paramount for better value.
The forum also addressed inflation, which has trended downwards in 2025 but remains susceptible to volatility in food prices. Participants stressed the necessity of stabilizing the foreign exchange market’s liquidity, deepening regional trade integration, and reinforcing the public debt framework.
The NCBA forecast identified strong support from Kenya’s service sectors, including telecommunications, transport, and domestic trade. While the manufacturing sector is expected to show mixed performance, the food sub-sector is projected to exhibit greater resilience.
Positive news also emerged for exports: global coffee prices are anticipated to trade at multi-year highs of about USD 7.00 per kilo. Horticultural exports are expected to remain stable following the extension of the European Union’s deforestation regulations for SMEs.
Looking ahead to 2026, NCBA forecasts that the economy will accelerate further, growing by 5.1%. This growth will be underpinned by renewed fiscal momentum, continued export diversification, and improved investor confidence. Mr. Gachora concluded by urging the development of a high-frequency consumer activity indicator to better track household consumption, which accounts for over 70% of Kenya’s GDP.