Kenya’s economy is poised to experience significant growth in 2024, with fresh forecasts placing the rate at 6.1 per cent, up from the earlier projection of 5.9 per cent.
This optimistic outlook is anchored on strategic investments and improved food supply, bolstering the country’s potential for continued recovery and growth. A new report, unveiled by the Kenya Institute for Public Policy Research and Analysis (KIPPRA), underscores the agricultural sector’s vital role in driving this expansion.
KIPPRA’s latest Kenya Economic Report projects the economy’s growth to surge even higher, reaching 6.6 per cent in the medium-term. The report stresses that favourable weather patterns and expanding partnerships will be key to sustaining this upward trajectory.
At the baseline, growth is set to hit 6.2 per cent next year, with inflation remaining within the government’s target range. However, should adverse factors such as poor rainfall or escalating debt issues arise, the economy could slow to a more modest 5.3 per cent.
Treasury CS John Mbadi signing for the loan facility, in Beijing on September 6, 2024.
Photo
Treasury
Why it matters: The latest projection signals a positive shift in the country’s financial landscape, driven by a resurgence in agriculture and strategic investments. This growth comes at a critical time when inflation is stabilising, public debt is on a sharp decline, and the government is creating favourable conditions for investment.
For ordinary Kenyans, this means potential improvements in job opportunities, better food security, and increased business activity, particularly for small and medium enterprises. As the economy strengthens, the government may also have more leeway to invest in critical infrastructure and social services, helping to reduce poverty levels.
However, the forecast is contingent on factors such as favourable weather and sound debt management. Any disruptions in these areas could undermine the projected growth, affecting not just the national economy but also the livelihoods of millions of Kenyans. Therefore, the government’s ability to mitigate risks will be crucial in realising these growth ambitions.
Dig deeper: Agriculture remains at the heart of Kenya’s economic engine, with the report highlighting its crucial contribution to growth. Counties across the country are expected to see their Gross County Product (GCP) rise by 5.9 per cent, with growth forecasted to average 6.5 per cent in the medium-term.
For arid and semi-arid regions, investment in livestock production, enhanced by programmes such as livestock off-take during natural disasters, offers a promising path forward. Sectors like the creative economy, transport, and retail also present opportunities for growth.
President William Ruto interacting with workers at Lumumba Estate Affordable Housing Project in Kisumu County, August 31.
Photo
PCS
This positive outlook comes on the heels of other encouraging forecasts. The Central Bank of Kenya (CBK) recently adjusted its growth expectations, projecting a 5.5 per cent expansion for 2025, following this year’s anticipated 5.4 per cent increase.
The new projections contrast slightly with previous estimates. In February, the government forecasted 6.3 per cent growth for this year, revising its earlier prediction of 6.1 per cent for 2023. These revised figures align with the government’s broader economic strategy, which outlines a growth plan through to 2027, with a focus on expanding small and medium-sized enterprises (SMEs) and boosting agricultural output.
Zoom out: While the overall outlook is optimistic, there remains some caution around debt vulnerabilities. The report anticipates a substantial 68 per cent decline in public debt, an essential development for long-term fiscal stability.
However, the government will need to continue balancing growth initiatives with prudent debt management to avoid undermining these gains.
