Kenya’s economy is proving stronger than expected in 2025, with President William Ruto announcing that the nation’s growth will exceed earlier projections despite global trade turbulence and higher U.S. tariffs.
Speaking at the Japan-Africa leaders conference (TICAD) in Yokohama on Wednesday, Ruto said the economy is on course to expand by 5.6% this year, above the 4.7% achieved in 2024.
“GDP (gross domestic product) is expected to grow 5.6% this year, despite global domestic headwinds arising from escalating tariffs and trade disruptions affecting many economies.”
President William Ruto
The projection surpasses forecasts by Kenya’s finance ministry and the central bank, which had placed growth at 5.3% and 5.2% respectively. The performance highlights Kenya’s resilience amid domestic challenges and external pressures.
Alongside the economic outlook, Kenya and Japan signed a term sheet for a yen-denominated loan backed by Nippon Export and Investment Insurance (NEXI). Japan’s Ministry of Foreign Affairs confirmed the agreement but did not disclose details on pricing or terms.
The Japanese government explained that NEXI’s insurance backing will reduce borrowing costs for Kenya by cushioning investors against risks. This deal follows an earlier accord signed in February 2024 between Nairobi and NEXI aimed at deepening financial cooperation.
Kenya has long sought diversified funding channels to support its infrastructure and economic agenda, especially in light of volatile global markets. The move aligns with similar strategies by other African nations. For instance, Ivory Coast successfully raised 50 billion Japanese yen in July through an ESG-certified samurai bond, marking growing African interest in Japan’s financial markets.
Japan, for its part, has been strengthening its economic partnerships across Africa, investing heavily in sectors ranging from road construction and power generation to scientific research in Kenya.
Kenya Balances Growth With Rising Challenges
Kenya’s economy continues to show robust sectoral performance. In the first quarter of 2025, GDP expanded, driven by agriculture, trade, accommodation, food services, public administration, transportation, and finance. This broad-based momentum has given policymakers confidence in the country’s growth trajectory.
Inflation has also remained under control, recorded at 4.1% in July 2025, which falls comfortably within the Central Bank of Kenya’s target band of 2.5% to 7.5%. The stable inflation rate allowed the central bank to cut its benchmark interest rate for the seventh consecutive time, lowering the policy rate to 9.50% in August in a bid to stimulate lending and further boost economic activity.
Despite these positive signs, Kenya faces structural hurdles. Public debt remains high, with debt servicing consuming about a third of total tax revenue. At the same time, subdued private consumption and industrial activity linger due to earlier political and weather-related disruptions.
Remittance inflows and a rebound in exports have offered vital support to Kenya’s external balances, helping narrow the current account deficit to 3.1% of GDP. These factors have given the government room to manage fiscal pressures while maintaining momentum for growth.
The finance ministry has acknowledged that risks remain, citing global trade disputes, fluctuating commodity prices, and extreme weather conditions. However, the latest figures suggest that Kenya’s economy is charting a sustainable growth path.
President Ruto’s upbeat assessment reflects the country’s broader ambition of sustaining annual expansion above 5% in the medium term. The strong showing in 2025, coupled with strategic international partnerships such as the Japan loan deal, signals Kenya’s determination to shield its economy from global uncertainties and advance its development agenda.
“Kenya is on a trajectory of sustained economic growth but faces risks from global trade disputes, market volatility and extreme weather conditions,” the finance ministry stated.
With this momentum, Kenya stands poised to not only weather global storms but also chart a stronger and more resilient economic future.
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