GDP
In the third quarter of 2024, the real Gross Domestic Product (GDP) experienced a growth rate of 4.0%, a slowdown from the 6.0% growth recorded in the same period the previous year. This deceleration can be attributed to a widespread decline in performance across various sectors of the economy. Notably, the Construction and Mining and Quarrying sectors faced contractions of 2.0% and 11.1%, respectively. However, several sectors demonstrated positive growth, including Agriculture, Forestry and Fishing (4.2%); Financial and Insurance (4.7%); Wholesale and Retail (4.8%); Transportation and Storage (5.2%); Real Estate (5.5%); and Accommodation & Food Services, which surged by an impressive 13.7%.

AGRICULTURE
The agricultural sector is projected to have grown by 4.2% in Q3 2024, a decrease from the 5.1% expansion seen in Q3 2023. This growth can be attributed to the favorable weather conditions that persisted during the first three quarters of 2024, although they were less intense than those in 2023. While there were increases in cane and milk production, tea production experienced a notable decline of 12.2%.

MANUFACTURING
The manufacturing sector’s GDP growth was recorded at 2.3% in Q3 2024, down from 2.8% in Q3 2023. This growth was primarily driven by the food subsector, with remarkable increases in sugar production at 197.4%, soft drinks at 27.5%, and dairy processing at 6.5%. However, there were declines in the production of galvanized sheets, cement, and the assembly of motor vehicles, which fell by 4.2%, 12.1%, and 0.4% respectively.

CONSTRUCTION
The construction sector experienced a contraction of 2.0% in Q3 2024, a significant drop from the 4.0% growth recorded in Q3 2023. This decline was marked by a 10.0% decrease in cement consumption and a substantial 40.9% drop in imported bitumen year on year. Conversely, there was an increase of 11.5% in the quantity of imported iron and steel. Additionally, credit extended to enterprises within the construction sector fell by 13.6%, decreasing from Kes 149.6 billion in the same period in 2023 to Kes 129.2 billion as of September 2024.

TRANSPORT
The transportation and storage sector recorded a growth of 5.2% in Q3 2024, slightly up from the 5.1% growth seen in Q3 2023. This growth was supported by an increase in the consumption of light diesel and higher port throughput, indicating a positive trend in the sector’s performance.

EXCHANGE RATES
The Kenya shilling showed notable stability in January 2025, with a slight appreciation of 0.05% to close at Kes 129.2 against the US dollar. Averaging at Kes 129.4 during the month, it reflects a steady performance in the foreign exchange market. Additionally, the mean exchange rates against the Sterling Pound and Euro were 159.8 and 134.0 respectively.
Remittance inflows indeed reached an all-time high of USD 4,945 million in 2024, marking an impressive 18.0% increase from the previous year. The strong performance in December, with inflows of USD 445.4 million, further emphasizes the robust nature of these remittances, particularly from the United States, which accounted for 51% of the total.
Additionally, the usable foreign exchange reserves standing at USD 8,877 million as of January 30th, 2025, ensures that Kenya meets the Central Bank of Kenya’s requirement for import cover.

BONDS
The yields on the 91-day, 182-day, and 364-day treasury bills in January 2025 averaged 9.55%, 10.03%, and 11.31%, showing a slight decline from December 2024’s averages of 10.08%, 10.15%, and 11.67%. The Treasury bill auction on January 30th received bids totaling Kes 13.5 billion against an advertised amount of Kes 24.0 billion, resulting in a performance of 56.1%. Overall, interest rates remained relatively stable for the respective treasury bills at 9.522%, 10.028%, and 11.313%.
During the Treasury bond auction of January 15th, the reopened 15-year and 25-year fixed rate Treasury bonds received bids totaling Kes 59.0 billion against an advertised amount of Kes 30.0 billion, resulting in an impressive performance of 196.7%. The average interest rates for these bonds were 14.21% and 15.68%, respectively. Additionally, the government is reopening fourteen- and seventeen-year infrastructure bonds valued at Kes 70 billion to fund infrastructure projects for the FY 2024/2025, with the sale closing on February 12, 2025, and coupon rates set at 13.938% and 14.399%.

GLOBAL ECONOMY
Global growth is indeed expected to remain stable, with forecasts of 3.3% for both 2025 and 2026, which is below the historical average of 3.7% from 2000 to 2019, according to the IMF’s January 2025 report. In the United States, however, underlying demand appears robust, driven by strong wealth effects, a less restrictive monetary policy, and supportive financial conditions, with growth projected at 2.7% in 2025.
In the euro area, growth is anticipated to pick up, but at a more gradual pace of 1.0%, as geopolitical tensions continue to impact sentiment. The weaker-than-expected momentum observed at the end of 2024, particularly in the manufacturing sector, coupled with increased political and policy uncertainty, adds to the challenges. In emerging markets and developing economies, growth in 2025 is expected to align closely with that of 2024. Specifically, China’s growth is projected at 4.6%, while India is expected to maintain a solid growth rate of 6.5% in 2025.
International oil prices decreased during the last week of January 2025. The price of Murban oil declined to USD 78.54 per barrel on 30th January, from USD 81.03 per barrel on January 23rd due to weak demand.