Kenya’s economy expanded by 4% in the third quarter of 2024, marking the slowest growth rate since early 2021.
This is a notable decline from the 4.6% growth recorded in the previous quarter and a sharp drop from the 6% growth during the same period in 2023.
The figure also fell short of the central bank’s forecast of 5.2%, highlighting the economic strain caused by disruptions across multiple sectors following anti-government protests earlier in the year.
Key Drivers of the Slowdown
The Kenya National Bureau of Statistics (KNBS) attributed the sluggish growth to reduced activity in critical industries:
- Construction, Mining, and Quarrying: These sectors experienced significant contractions, reflecting broader challenges in industrial output.
- Agriculture: The country’s main economic driver, which contributes nearly a quarter of total output, grew by 4.2%. This is a slowdown from the 4.8% growth seen in the previous quarter. Reduced tea production, a major export commodity, further dampened the sector’s performance.
- Tourism and Hospitality: Activities related to accommodation and food services grew at a slower rate of 13.7%, down from the 26.6% growth recorded in the second quarter. This decline signals a tapering off of the post-pandemic recovery that had buoyed the industry in recent quarters.
Also Read: Kenya’s economy grew by 7.5% in 2021 from 0.3% contraction in 2020; KNBS
Impact of Political Unrest
The slowdown coincided with widespread unrest triggered by tax reforms introduced by President William Ruto.
These reforms, while aimed at addressing fiscal deficits, disrupted business operations and fueled public dissent. The resulting instability has been reflected in Kenya’s purchasing managers’ index, which averaged 47.8 in the third quarter—a figure that indicates worsening business conditions.
Economic Outlook
While the Central Bank of Kenya (CBK) maintains its 2024 growth forecast at 5.1%, the current trajectory suggests that achieving this target will require urgent measures to counter the economic impacts of political unrest. Revitalizing key industries and restoring investor confidence are essential to avoid further stagnation.
Kenya’s economy continues to face significant fiscal and structural challenges, and without stronger recovery efforts, the risk of prolonged economic stagnation looms large.
