The Kenyan economy experienced a 4% growth rate in Q3 of 2024, marking its slowest expansion in four years. Despite a stronger shilling and reduced inflation, most sectors faced contraction during this period, indicating a challenging macroeconomic environment. Sectors like construction and mining saw significant declines, reflecting decreased investor confidence in large projects. The slowdown in construction was exacerbated by tight credit conditions and reduced demand for construction materials due to scaled-back government projects.
On a positive note, some sectors showed growth, including hospitality, logistics, real estate, retail, financial services, insurance, and agriculture. However, the World Bank has revised Kenya’s 2024 growth forecast from 5% to 4.7%, citing fiscal challenges from the country’s debt burden, protests, and floods. Despite this, the Ministry of Finance remains optimistic about a 5.2% growth projection for 2025, driven by agriculture, logistics, and retail.
The economic slowdown in Kenya contrasts with neighboring Uganda’s 6.7% growth and Tanzania’s 6.3% growth in Q3 2024. The impact of this slowdown is expected to affect jobs and consumer spending, particularly in sectors like construction, agriculture, and hospitality. Unemployment may rise, and consumer spending could decline, especially in rural areas heavily reliant on these industries.