KDRTV NEWS – Nairobi :- Kenya is set to overtake Ethiopia as East Africa’s leading economy in 2025, marking a major regional power shift, according to the latest forecasts by the International Monetary Fund (IMF).
Kenya’s Gross Domestic Product (GDP) is projected to rise to $132 billion (Ksh 17 trillion), up from $121 billion (Ksh 15.6 trillion) in 2024. In contrast, Ethiopia’s economy is expected to shrink to $117 billion, a sharp decline from $143 billion last year.
The turnaround comes after Ethiopia implemented sweeping reforms to liberalize its currency — a move that saw the Ethiopian Birr lose over 55% of its value against the dollar. The drastic devaluation helped Ethiopia secure $3.4 billion from the IMF and $16.6 billion from the World Bank, while also unlocking talks to restructure nearly half of its $28.9 billion external debt. But the reforms have brought short-term economic pain.
Kenya’s Resilience Pays Off
While Ethiopia battles economic turbulence, Kenya has stayed the course — and it’s paying off.
The Kenyan shilling was the world’s best-performing currency in 2024, appreciating by nearly 21% against the US dollar. The country also successfully floated a $1.5 billion Eurobond in February, boosting investor confidence and foreign reserves.
Additionally, Kenya’s economy has been buoyed by record-breaking diaspora remittances and strong export performance. Kenyans abroad sent home Ksh 651.7 billion ($4.94 billion) in 2024 — an 18% increase from the previous year — with December alone bringing in a historic $445.4 million (Ksh 57.6 billion). The United States accounted for over 50% of the total inflows.
On the trade front, Kenya’s merchandise exports hit a record $8.25 billion (Ksh 1 trillion) in 2024, driven by solid gains in agriculture and manufacturing. The month of July saw the highest exports, valued at $747.4 million (Ksh 96.7 billion).
Setbacks at Home, Challenges Abroad
Despite these gains, Kenya has faced internal turbulence. The controversial Finance Bill 2024 sparked nationwide protests and forced the government to shelve its tax proposals. As a result, the country fell short of revenue targets and had to exit a $3.6 billion IMF program, forfeiting $850 million in the process. Talks are now underway to negotiate a new deal.
Globally, the IMF has revised its economic outlook, warning of a slowdown in growth due to escalating trade tensions. The world economy is now expected to grow by 2.8% in 2025, down from an earlier forecast of 3.3%. In Sub-Saharan Africa, growth is projected to be just 3.8%, the slowest since the Covid-19 pandemic.
A New Regional Order
Even with global uncertainties and domestic headwinds, Kenya appears to be regaining its footing as a regional economic powerhouse. If the current trajectory continues, Kenya could solidify its leadership role in East Africa — while Ethiopia focuses on recovery and restructuring.
The question now is: can Kenya sustain this momentum and turn economic growth into broader prosperity for its people?
