The National Treasury projects that Kenya's economy will post a 5.3 percent growth this year powered by improved output in agriculture and uptick in the services sub-sector.

According to the Budget Policy Statement for 2025 released this week, this year's forecast represnts an expansion from the 4.6 percent economic growth realised last year but a dip from the 5.6 percent growth recorded in 2023.

"Agricultural productivity is expected to be largely driven by favourable weather conditions and productivity-enhancing government interventions," the Budget Policy Statement for 2025 states in part, adding that uptick in Kenya's agriculture industry could average about three percent.

Last year, Kenya's economy experienced a deceleration in key economic activties in the first nine months to September 30 attributable to high interest rates that saw credit uptake to the private sector slump.

“The MPC also noted the sharp deceleration in credit to the  private sector, and the slowdown in growth in the second quarter of 2024, and concluded that there was scope for a further easing of the monetary policy stance to support economic activity," Central Bank of Kenya Governor Dr. Kamau Thugge said in October.

The uptake of loans in Kenya's private sector slowed to 4 percent in June 2024, down from 7.9 percent reported earlier in March. Consequently, the banking sector continued to experience a steady deterioration in non-performing loans (NPLs) ratios to 16.34 percent from 15.5 percent reported in February 2024.

The National Treasury, however, said that the projected economic growth this year would be driven by agricultural and a resilient services sector, which is expected growing at about 6.6 percent over the medium term.

The Treasury added that sector reforms targeting the Information Communication and Technology industry has the potential to revitalise expansion in the financial services, healthcare and public administration areas of the economy.

Additionally, Kenya's tourism sub-sectors, which is a key plank of the economy, is expected to benefit from the ongoing promotion of the country as a preferred destination for high-profile global conferences, cultural immersion, festivals over and above traditional wildlife safari offering.

The Budget Policy Statement for 2025 forecasts that aggregate domestic demand will remain resilient, with consumption averaging around 87.4 percent of GDP this year, backed by easing inflation.

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