• Kenya’s Q2 GDP grows 5%, driven by services and rebound sectors
• Easing inflation leads to rate cuts, boosting lending and demand
• Shilling gains on dollar; Ruto forecasts 5.6% annual growth
  

Kenya's economy grew by 5% in the second quarter of 2025, up from 4.6% recorded during the same period in 2024, according to data released Tuesday by the Kenya National Bureau of Statistics (KNBS).

Growth was primarily fueled by the financial and insurance services sector, which expanded by 6.6%, followed by transport and storage at 5.4%, and agriculture, forestry, and fishing at 4.4%.

A significant rebound in the construction sector, which grew 5.7%, and the mining and quarrying sector, which surged 15.3%, also contributed substantially to GDP growth between April 1 and June 30. Both sectors had contracted in the second quarter of 2024.

The KNBS also noted that inflation slowed to 3.89% in the second quarter of 2025, down from 4.87% a year earlier, largely due to a drop in the prices of food and non-alcoholic beverages.

This easing inflation prompted the Central Bank of Kenya (CBK) to cut its benchmark lending rate twice, first to 10% in April and then to 9.75% in June, a significant decrease from the 13% rate held in June 2024.

As a result, the money supply grew 8.1% in the second quarter of 2025, reaching 6,450.1 billion Kenyan shillings ($49.9 billion) by the end of June. This growth encouraged commercial banks to increase lending to households and businesses, stimulating consumption and investment.

During the quarter, the Kenyan shilling appreciated 1.2% against the U.S. dollar. However, it depreciated against other major international currencies, losing 6.5% against the Japanese yen, 4.5% against the British pound, and 4% against the euro.

Last month, Kenyan President William Ruto projected that East Africa's largest economy would expand by 5.6% this year, up from 4.7% last year. The President's estimate is higher than the June forecasts of the Finance Ministry and the Central Bank, which stood at 5.3% and 5.2%, respectively.

Walid Kéfi