Growth slows to 4.7 per cent as less jobs created

Kenya's economic performance slowed down significantly last year as the country struggled to stay afloat amid global and domestic headwinds.

New data released by the government statistician indicates the country's gross domestic product (GDP) expanded by 4.7 per cent in 2024, a drop from the 5.7 per cent growth recorded in 2023. 

The Economic Survey 2025 released by Kenya National Bureau of Statistics (KNBS) yesterday linked the slowed growth to a dip in performance of Kenya’s main GDP earner, agriculture, which reported a decelerated growth of 4.6 per cent compared to 6.6 per cent in 2023.

National Treasury and Economic Planning Cabinet Secretary John Mbadi said the initial projection for 2024 was a growth of 5.3 per cent. However, due to the shocks, the country was only able to realise 4.7 per cent.

“In fact, at one point, we thought it would slow further to 4.6 per cent,” said the CS.

Some of the shocks were constrained fiscal space, high interest rates that have exacerbated debt servicing costs, the infamous Gen Z protests that halted economic activities and extreme weather.

“These extreme weather events and conditions have impacted negatively on our economic growth,” said Mbadi.

Other shocks came from the Ukraine-Russia conflicts and war in the Middle East.

“These negative shocks have impacted economic activities and increased the cost of living underscoring the need for robust and targeted interventions,” he said.

Amid this slowdown, Kenya recorded its lowest average inflation of 4.5 per cent since 2020—indicating that the prices of goods and services increased at the lowest level in five years.

This has not been felt on the ground, however, with many businesses and households reporting lower incomes and buying power. Some economists have attributed the lower inflation to reduced demand for goods and services rather than price cuts.

In 2020, the inflation rate stood at 5.4 per cent, which grew to 6.1 per cent in 2021, 7.7 per cent in 2022 and 2023 and 4.5 per cent in 2024.

“This is the lowest we have achieved in the last five years. In November, we noted our inflation rate dropped to 2.7 per cent. That happened to be the lowest in many years,” said KNDS director general Macdonald Obudho.

The number of new jobs created last year stood at 782,300, a significant reduction of 65,800 compared to 2023.

The drop was linked to a slowdown in job creation in the informal sector, as Dr Obudho noted that 90 per cent of new jobs created in 2024 was in the informal sector.

“There was a slowdown in the number of new jobs created in the informal sector from 720,900 in 2023 to 703,700 jobs in 2024.”

Among the gaining sectors, financial and insurance activities grew by 7.6 per cent, transportation and storage by 4.4 per cent and real estate by 5.3 per cent.

Construction, however, shrunk recording a contraction of 0.7 per cent from 3.0 in 2023 similar to mining and quarrying courtesy of Base Titanium closing its depleted ore whose contraction was 9.2 per cent in the period.

Kenya’s nominal GDP increased during the period to Sh16.2 trillion from Sh15.0 trillion.

And when looked against other East African Community (EAC) markets, Kenya’s GDP growth has been dwarfed by Rwanda that recorded 7.0 per cent, Uganda’s 5.9 per cent and Tanzania’s 5.4 per cent.

The Democratic Republic of Congo (DRC) recorded a decelerated growth of 4.7 per cent, Burundi slowed recording by 2.2 per cent growth while South Sudan’s economy had a negative growth of 26.5 per cent due to internal conflicts that disrupted oil production.

Of the EAC countries, only Uganda and Tanzania recorded an accelerated growth of 5.9 per cent in 2024 from 4.6 per cent in 2023, and 5.4 per cent from 5.1 per cent, respectively. Uganda’s growth is linked to oil exploration.

“It is a decelerated growth rate. The economy has growth but at a slower rate,” explained Kenya National Bureau of Statistics Director General Obudho.

While Kenya’s 2024 GDP growth was above the global 3.2 per cent, it was lower than EAC’s average growth of 5.4 per cent.

Mbadi noted that the decelerated growth for 2024 mirrors the world GDP performance that also saw a slowed to 3.2 per cent in 2024 from 3.3 per cent.

He referenced on International Monetary Fund (IMF) projections of how world economies would perform in 2025 which shows a revised downward growth to 2.8 per cent.

“And coming back home we have revised our growth to about 4.8 per cent even though our projection as a country is that we will have 5.4 economic growth,” he said.

The decelerated growth in the year has also informed the National Treasury’s revision of revenue from Sh3.1 trillion to Sh3.0 trillion and its focus on own source collection. 

“We have revised this because we are looking at the reality and the actual collection. We are on the month of May, so we can easily deduce going forward based on the 10-month performance of revenue,” said the CS.

The CS said considering ordinary revenue has remained stagnant, the focus has shifted to austerity measures and collections from agencies.

"The government will continue to explore own source revenue from ministries, departments, agencies and counties and encourage private investments including foreign direct investments (FDIs)," he said.