Kenya flag Kenya: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Kenya has enjoyed a decade of strong economic growth, allowing the nation to access the status of middle-income country in 2016. Kenya was one of the fastest-growing economies in Sub-Saharan Africa and growth was only partially affected by the Covid-19 pandemic, with GDP contracting 0.3%. The country returned to its growth path in 2021 (7.5%) and in 2022 (5.3% as per the IMF estimates), driven by broad-based increases in services and industry, whereas the agricultural sector’s performance was hampered by drought (the most severe in the last forty years). According to the IMF, Kenya’s medium-term growth prospects remain positive with GDP projected to grow by 5.1% this year and 5.5% in 2024 notwithstanding current global and domestic shocks, backed by private sector credit expansion, a near-term recovery in agricultural production, and high commodity prices favourable to the country’s exports.

Concerning public finances, the COVID-19 pandemic and the Russia-Ukraine war contributed to lower international reserves and a widening current account deficit, estimated at 5.9% of GDP – USD 6.9 billion according to Fitch Ratings. Exchange rate flexibility has helped absorb some of the external pressure, but foreign-currency liquidity has tightened (to USD7.2 billion as of November 2022, down from USD 9.5 billion at the end of 2021) and currency depreciation has increased Kenya's external interest servicing in shilling terms. For 2023 and 2024, Fitch Ratings expects the current account deficit to remain stable. The debt-to-GDP ratio rose to 69.4% in 2022 (from 67.8% one year earlier), and is projected to follow a downward trend over the forecast horizon – to 67.5% this year and 64.6% in 2024 according to the IMF – although external debt service should rise to 24.8% of current external receipts by 2024. Similarly, an improved revenue performance helped the fiscal deficit narrow to 6.2% of GDP in FY22, down from 8.2% in FY21. Inflationary pressures increased over the course of the year due to a rise in food prices caused by the drought that affected the country, as well as global supply shocks, resulting in an average inflation rate of 7.4%. For 2023, the IMF expects the rate to moderate marginally to 6.6%, followed by 5.1% in 2024, below the 5.9% average recorded between 2017-21. In order to achieve this target, the Central Bank of Kenya raised the main policy rate three times in 2022, by a total of 175bp. Kenyan authorities remain committed to the 38-month program under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements (worth USD 2.34 billion) approved by the IMF in April 2021. This program aims to reduce debt vulnerabilities by raising tax revenues and tightly controlling spending while safeguarding resources to protect vulnerable groups (IMF). The third review under these arrangements was completed in July 2022, providing Kenya access to about USD 236 million of funding. The new government will also pursue the previously launched Big 4 development agenda: the program, which is part of the long-term development plan of the country “Vision 2030”, prioritizes four major areas: manufacturing, universal healthcare, affordable housing and food security. Kenya relies heavily on international portfolio investment inflows, which makes the local currency highly vulnerable to potential capital outflows and decreasing global risk appetite.

The country has been invested in reducing child mortality, meeting this Millennium Development Goals (MDGs) target. Kenya also managed to almost reach universal primary school enrolment, while narrowing gender gaps in education. The unemployment rate was estimated at 5.7% in 2021 (World Bank). Kenya’s total workforce is projected to increase by 40.6% to 40.4 million by 2035; as data from the Kenya National Bureau of Statistics (KNBS) indicate the country will add 11.7 million to the job market by 2035, this may cause mounting unemployment in an economy that is not generating adequate jobs for school leavers and college graduates. Overall, the country’s GDP per capita (PPP) was estimated at USD 6,122 in 2022 by the IMF, while the World Bank macro poverty outlook estimates the country’s ratio of extremely poor (living below USD 1.9 a day) reduced from 19.2 million or 35.7% of the population in 2020 to 18.8 million or 34.3% in 2021.

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 113.70112.75115.08122.39130.14
GDP (Constant Prices, Annual % Change)
GDP per Capita (USD) 2,2452,1882,1942,2942,398
General Government Gross Debt (in % of GDP) 68.470.268.366.765.0
Inflation Rate (%) n/a7.
Current Account (billions USD) -5.86-5.49-5.64-6.29-6.63
Current Account (in % of GDP) -5.1-4.9-4.9-5.1-5.1

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
Kenyan Shilling (KES) - Average Annual Exchange Rate For 1 GBP 137.72133.04135.15127.50136.48

Source: World Bank, 2015


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Latest Update: December 2023

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