NCBA Economic Forum Projects 4.8% GDP Growth in 2024, Highlights Key Trends for 2025

NCBA has forecasted a steady growth in the country’s GDP with output projected to close at 4.8% in 2024 and remain consistent into 2025. In an economic forum held today, under the theme,”Navigating Uncertainty – Key Trends Influencing the Economic and Business Environment in 2025,” the bank addressed the global and domestic factors influencing Kenya’s economy, including inflation trends, fiscal policy, and sector performance.

Speaking on the projected trajectory, NCBA Group Managing Director, John Gachora noted that in the previous year, the country was in the throes of a financial crisis brought about by a potential sovereign debt default with the maturity of the June 2024 Eurobond. A raging currency crisis further exacerbated those concerns and an unprecedented tight external environment that locked Kenya out of international capital markets.

“Kenya acted decisively to resolve its exceptional financing needs for the June 2024 Eurobond maturity, well ahead of schedule, which significantly eased sovereign spreads,” Gachora noted. “Since then, the currency crisis has receded, bringing a welcome stability across Kenya’s financial markets.

Key Highlights:

Global Economic Conditions:

• Inflation: Lower inflation rates globally are improving the external environment.
• Global GDP Projections: The IMF projects global growth of 3.1% in 2024, expected to rise to 3.3% in 2025.
• Global PMI: The global composite PMI has remained above 50 this year, signaling steady economic activity worldwide.

Domestic Economic Insights:

• Agriculture and Agro-Processing: Favorable weather continues to boost agricultural exports, positively impacting food inflation.
• Service Sector Resilience: The service sector is expected to maintain resilience, with most sub-sectors projected to grow at near long-term average rates.

Fiscal Challenges:

• Public Debt: Debt interest payments will consume 38% of tax revenue in 2024/25, decreasing slightly to 35% in 2025/26. This constrains funds for development, limiting medium- and long-term growth prospects.
• Tax Burden: Rising and unpredictable tax and statutory deductions challenge cash flow for businesses.
• Pending Bills: High pending bills, totaling KES 516 billion for the national government and KES 182 billion for counties, restrict liquidity for the private sector, impacting economic stability.

David Ndii, the Chairperson of the President’s Council of Economic Advisory expressed his optimism for the coming year, highlighting a favourable inflation outlook backed by strong forex reserves, a robust export performance and improved capital flows following a decline in global interest rates.

Looking ahead, he identified affordable housing, domestic energy, electric vehicles, and sustained agricultural productivity as key areas that will drive the economy’s growth.

To support growth, Ndii emphasized the need to raise national investment to 25% of GDP, driven by increased savings, expanded private partnerships, and financial deepening.

This year’s 9th edition of the forum was attended physically and online by over 700 NCBA customers drawn from various sectors including Manufacturing and agriculture, among others. Key speakers included David Ndii, Chairperson of the President’s Council of Economic Advisors; Mary-Ann Musangi, Chairperson of the Women in Manufacturing Committee, KAM, and the Managing Director of HACO Industries LTD, and Sandeep Main, Partner, Tax and Regulatory Services at KPMG.

NCBA Economic Forum was officially launched in January 2018 with the aim of bringing together the government and industry stakeholders for candid conversations meant to spark economic growth.