The World Bank has revised Kenya’s economic growth forecast for 2025 upward to 4.9%, up from the 4.5% projection made in May, citing a strong rebound in the construction sector. The development marks a positive shift after last year’s slowdown, which saw construction growth dip sharply.
According to the report released on Monday, Kenya’s construction sector, which was heavily impacted by the 2024 protests, has reversed its decline, offsetting a slowdown in manufacturing. “Signs of recovery are emerging,” the World Bank noted, emphasizing that the first half of 2025 showed accelerating construction activity.
In 2024, the sector had recorded dismal growth of just 0.1% in the first quarter, down from 3.0% in the same period of 2023. Key indicators mirrored this decline, with cement consumption falling 12.7% and bitumen imports dropping 32.4%.
President William Ruto, speaking during the State of the Nation Address, maintained a more optimistic outlook, projecting economic growth between 5% and 5.8% for 2026. He attributed this to lower credit costs, rising exports, improved household spending fueled by low inflation, and overall macroeconomic stability. Treasury CS John Mbadi echoed this optimism, linking growth to ongoing fiscal consolidation.
Despite the upbeat forecast, the World Bank cautioned that Kenya’s fiscal consolidation measures could weigh on growth. Other potential risks include the expiration of AGOA, which lapsed in September, although the government remains confident of securing an extension before year-end.
The report also recommended reforms aimed at boosting competition, investment, and long-term economic growth. Some economic advisors, including David Ndii, have previously warned that the construction sector could face challenges due to debt-financed projects slowing down. Nevertheless, ongoing government initiatives, particularly the push for affordable housing, are providing renewed momentum for the sector.
With construction leading the recovery, Kenya’s economy appears poised for gradual growth, but careful policy management will be key to sustaining momentum through 2025 and beyond.
