Economy

Kenya's Economy to Grow Slowest in 2025 at 4%, Says World Bank

Elevated Lending Rates will also contribute to the slowdown, in what the World Bank opines high lending rates which have discouraged private sector borrowing, despite lower inflation rates.

May 27, 2025
707 1 minute read
Kenya Set to Receive Ksh.1.5 billion from World Bank
President William Ruto (Left) and World Bank President Ajay Banga

Kenya’s economic growth is projected to decelerate in 2025, primarily due to escalating public debt and fiscal constraints, according to a recent World Bank report.

The country’s growth rate, better known as total economic output, is expected to slow to 4.5%, down from 4.7% in 2024 and 5.7% in 2023.

The World Bank attributes this slowdown to several factors including high public debt which has ballooned to 65.5% of its Gross Domestic Product (GDP), limiting the government’s fiscal space for development initiatives.

Elevated Lending Rates will also contribute to the slowdown, in what the World Bank opines high lending rates which have discouraged private sector borrowing, despite lower inflation rates.

Also Read: Kenya’s Economic Growth Down to 4.7% in 2024, Says KNBS

The slow growth rate will also be occasioned by the decline in private sector credit. According to the Washington DC-based lender, credit growth to the private sector contracted by 1.4% in December 2024, a significant drop from 13.9% the previous year.

These challenges have particularly impacted key sectors such as manufacturing, finance, and mining, which are experiencing reduced credit availability and an increase in non-performing loans, especially among smaller banks.

In response, the World Bank recommends that Kenya implement targeted tax reforms, including the removal of certain consumption tax exemptions, to enhance fiscal health and reduce debt levels.

The Bank also suggests the need for improved revenue collection and fiscal consolidation to create a more conducive environment for private sector growth.

May 27, 2025
707 1 minute read
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Lawrence Baraza

Lawrence Baraza is a dynamic journalist currently overseeing content at Metropol TV Digital. With a keen focus on business news and analytics, Lawrence guides the platform in delivering insightful, data-driven content that empowers its audience to make informed decisions. Lawrence’s commitment to quality and his ability to anticipate market trends make him a key figure in the digital media landscape. His work continues to shape the way business news is consumed, making a significant impact in the field.

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