Kenya’s economy expanded by 4.9% in the third quarter of 2025, up from 4.2% a year earlier, as construction, mining, and tourism rebounded strongly. Yet the recovery remains uneven, with households facing higher food costs, slower agriculture growth, and a widening current account deficit that rose from Ksh43.5 billion to Ksh135.3 billion.
The latest Quarterly GDP report by the Kenya National Bureau of Statistics (KNBS) shows broad-based gains across key sectors. Construction swung back from a 2.6% contraction in Q3 2024 to post 6.7% growth, lifting demand for building materials and casual labour.
Mining and quarrying surged 16.6% after a 12.2% decline, while accommodation and food services expanded 17.7%, buoyed by tourism activity linked to Kenya co‑hosting the African Nations Championship (CHAN).
External-facing indicators also strengthened. International visitor arrivals rose 9.9% to 578,234 passengers, and cargo volumes at the Port of Mombasa increased from 10.2 million to 11.5 million metric tonnes year‑on‑year, signalling robust trade flows. However, higher import activity contributed to the widening external deficit, underscoring persistent pressures on the balance of payments.
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Agriculture grew 3.2% in Q3, as declines in coffee, vegetable, and tea exports weighed on performance. This is the slowest pace in more than two years. The sector’s softer outturn, alongside rising food prices, has kept household budgets under strain despite headline growth.
Inflation edged up to 4.42% from 4.08%, driven mainly by food and non‑alcoholic beverages.
The Central Bank of Kenya has cut its benchmark rate to 9.5% from 12.75%, aiming to spur lending and ease credit conditions for businesses and households. Mobile money transactions increased by 5.2% to Ksh646 million. Investor sentiment improved as the NSE 20 Share Index climbed from 1,776 to 2,973 points.
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Kenya’s debt burden, now at Ksh11.6 trillion, casts a long shadow. The government is relying on the National Infrastructure Fund and Sovereign Wealth Fund, a Ksh5 trillion plan approved by the Cabinet in December 2025 and awaiting parliamentary approval, to finance development without increasing public debt or raising taxes.
Elsewhere, real estate grew by 5.7%, financial and insurance activities 5.4%, transport and storage 5.2%, public administration 5.1%, wholesale and retail trade 4.8%, and information and communication 4.5%. Agriculture, forestry, and fishing remained among the main supporters of overall growth, despite the sector’s slower pace.
By Masaki Enock
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