Nairobi — Kenya's economy is projected to expand by 5 percent in 2025, driven by improved private sector credit growth, stable inflation, and increased fiscal spending, according to NCBA Group.

Group Managing Director John Gachora said the economy continues to draw strength from robust service sectors including telecommunications, transport, and domestic trade.

He noted that the manufacturing sector is expected to post mixed results, with the food sub-sector showing greater resilience.

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Gachora also pointed to positive export prospects, citing strong global coffee prices projected to average about $7 per kilo and steady horticultural exports following the extension of the European Union's deforestation regulations for small and medium enterprises.

"The outlook for 2025 remains positive despite global uncertainty. Kenya must continue to pursue pragmatic policy coordination and efficiency in public spending to ensure sustainable growth," Gachora said during the NCBA Economic Forum held in Nairobi.

Kenya's inflation remained stable at 4.6 percent in October, supported by lower food prices, according to the Kenya National Bureau of Statistics (KNBS). Earlier this month, the Central Bank of Kenya (CBK) cut its benchmark rate by 25 basis points to 9.25 percent to spur private sector lending.

However, Gachora warned that a slowdown in major economies such as the United States and key Asian markets could dampen Kenya's export performance and remittance inflows in 2026.

He also raised concerns over rising debt service costs, which consumed Sh509 billion in the first quarter of the 2025/2026 fiscal year out of total tax collections of Sh554 billion.

"This trend limits fiscal space for development. It is, therefore, crucial that the government enhances efficiency in public spending to achieve better value for money," he said.