Why Kenya’s GDP Growth Projection for 2024 was Downgraded- CBK

Kenya’s Real Gross Domestic Product (GDP) growth projection for 2024 was downgraded, the Central Bank of Kenya (CBK) has revealed.

CBK Governor Dr. Kamau Thugge revealed that Kenya’s Real GDP growth for 2024 is estimated at 4.6 percent down from the projection of 5.1 percent.

Dr. Thugge announced on Thursday, February 6, during the Monetary Policy Committee (MPC) press briefing in Nairobi.

GDP is the most common measure for the size of a country’s economy. It measures the value of the total final output of goods and services produced by that economy in a certain period.

The CBK governor said that the GDP downgrade was underpinned by a deceleration in growth in most sectors of the economy in the first three quarters of 2024.

The deceleration in private sector credit growth to key sectors of the economy and contraction in the construction sector were also cited.

On the other hand, the performance of the economy slowed in 2024 Q3, with real GDP growth decelerating to 4.0 percent in 2024 Q3 compared to 6.0 percent during the same period in 2023, mainly reflecting a slowdown across most sectors.

Dr Kamau Thugge, at the same time, revealed that the 2025 GDP growth is projected to recover in 2025 and is set at 5.4%.

CBK Governor speaks on Kenya’s GDP growth

According to him, the projected growth reflects robust growth of services driven by resilience of select sectors and stable growth of the agriculture sector.

Expected recovery in growth of credit to the private sector and improved exports growth supported by implementation of trade initiatives such as the Kenya-EU Economic Partnership Agreement are also reflections of the projected growth.

Kenya’s real GDP growth is expected to remain above the global, SSA and emerging market and developing economies averages in 2025 and 2026.

“The outlook is subject to uncertainties in the external and domestic environment, including rising tariffs on trade, and persistent geopolitical conflicts which could have potential impact on supply chains,” CBK noted.

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For 2024 Q2, Kenya’s GDP growth slowed to 4.6 percent as compared to 5.6 percent in 2023 Q2. 

Governor Thugge in October last year said that the slowed GDP growth reflected a deceleration in growth in most sectors of the economy, adding that construction, mining and quarrying sectors recorded contractions.

“The growth projection for 2024 has been revised to 5.1 percent from the previous projection of 5.4 percent, reflecting the growth outcome for 2024Q2 which shows a slowdown in growth,” he said in the presentation.

Thugge said that the revised projection also reflected a slowdown in private-sector credit growth in several key sectors.

Global developments and outlook

Globally, CBK has revealed that the headline inflation has moderated, but the pace of decline has slowed down in major economies due to stickiness in core inflation.

Also Read: IMF Boss Recommends Key Reforms for Kenya After 2-Day Visit

Central banks in major economies have continued to lower their interest rates, but at different paces depending on their inflation and growth outlooks.

According to the Central Bank, this should improve global financial conditions, and market access for emerging markets.

Global growth is projected to improve to 3.3 percent in 2025 from an estimate of 3.2 percent in 2024, supported by strong growth in the United States and India, and improved prospects for growth in the United Kingdom.

Risks to global growth outlook relate to elevated uncertainty on trade policy amid rising tariffs on imports, and further escalation of geopolitical tensions particularly the conflict in the Middle East and the Russia-Ukraine war.

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