World Bank Revises Kenya's 2025 Economic Growth to 4.5pc From 5pc

The World Bank has lowered Kenya's economic growth for 2025, down from 5 percent predicted about six months ago to 4.5 percent.

The Washington-based lender cites tighter global financial conditions, mounting fiscal pressure, and sluggish private sector activity for the expected decline.

The Bank also trimmed the country's 2026 growth forecast by 20 basis points to 4.9 percent, raising concerns over the country's ability to sustain recovery momentum in the face of domestic and external shocks.

The downgrade comes on the back of the Central Bank of Kenya's Monetary Policy Committee (MPC) announcing a cut in the benchmark lending rate by 50 basis points to 9.75 percent, a signal of growing concern about slowed economics and reduced credit access.

CBK Governor Kamau Thugge acknowledged the challenges ahead but expressed cautious optimism.

"There was scope for a further easing of the monetary policy stance to augment the previous policy actions aimed at stimulating lending by banks to the private sector and supporting economic activity, while ensuring inflationary expectations remain firmly anchored, and the exchange rate remains stable."

The move to ease monetary policy underscores the Central Bank's effort to counter slow growth amid constrained consumer demand and a high cost of living.

Kenya has also been under pressure to manage its rising public debt and attract foreign investment, even as geopolitical uncertainties continue to affect global trade and capital flows.

Regional Outlook

Kenya's downgrade fits within a broader regional pattern.

The report by the Bretton Woods-affiliated institution indicates that several sub-Saharan African countries have seen downward revisions in their growth prospects.

For instance, Botswana's 2025 forecast was slashed by 3 percentage points, while Mozambique experienced a 2.9-point downgrade.

In contrast, Tanzania and Uganda remain on firmer footing, with projections above 5.5 percent and no significant changes from previous forecasts.