Kenya’s economy expanded by 4.9% in the third quarter of 2025, up from 4.2% in the same period last year, signaling a recovery driven by construction, mining, and tourism, according to a quarterly report released by the Kenya National Bureau of Statistics (KNBS) on January 7, 2026.
Despite this growth, many households continue to feel the strain of rising food prices, slower agricultural growth, and a ballooning current account deficit, which widened from Ksh43.5 billion to Ksh135.3 billion.
The report highlights what economists call a “two-speed economy”, where certain sectors boom while ordinary families struggle to make ends meet.
Sectoral performance:
Construction rebounded strongly, growing 6.7% after contracting 2.6% in 2024. The recovery has boosted demand for casual labor, building materials, and cement.
Mining and quarrying surged 16.6%, reversing a previous 12.2% contraction. Local communities have benefited from increased revenue, although questions about long-term sustainability remain.
Tourism received a lift from Kenya co-hosting the African Nations Championship, with accommodation and food services expanding 17.7%. International arrivals jumped 9.9% to 578,234 passengers, boosting hotels, restaurants, and transport operators.
Port of Mombasa activity rose, handling 11.5 million metric tonnes of cargo, up from 10.2 million the previous year, signaling more imports but contributing to a widening trade deficit.
Agriculture, the backbone of rural livelihoods, grew only 3.2%, down from 4.0% in 2024. Declines in coffee, vegetable, and tea exports have impacted farmers’ and cooperative earnings.
Inflation and monetary policy:
Inflation rose to 4.42%, from 4.08% a year earlier, driven mainly by food and non-alcoholic beverages.
The Central Bank of Kenya (CBK) cut its benchmark rate to 9.5% from 12.75% to stimulate lending, aiming to lower borrowing costs and support business growth.
Other highlights:
Mobile money transactions increased 5.2% to Ksh646 million, reflecting steady grassroots economic activity.
The Nairobi Securities Exchange (NSE) 20 Share Index surged from 1,776 to 2,973 points, rewarding patient investors.
Kenya’s national debt remains high at Ksh11.6 trillion, prompting the government to rely on the National Infrastructure Fund (NIF) and Sovereign Wealth Fund (SWF), a Ksh5 trillion plan approved by Cabinet in December 2025 and pending parliamentary approval.
Economists warn that unless economic gains reach rural communities and the external deficit is addressed, the recovery risks remaining uneven, leaving many households feeling left behind despite headline growth.
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