Kenya's economy is projected to grow by 5.3 per cent in 2025, according to the National Treasury.

In its Budget Policy Statement for 2025, the Treasury said this growth would represent an increase from 4.6 per cent in 2024 and 5.6 per cent in 2023.

The country's economy contracted in 2024 due to a deceleration in economic activities during the first three quarters of the year and a slowdown in private sector credit growth to key sectors, according to the Treasury.

The Treasury said the 2025 expansion would be driven by enhanced agricultural productivity and a resilient services sector.

"Agricultural productivity is expected to be largely driven by favourable weather conditions and productivity-enhancing government interventions," the Treasury said, adding that growth in the sector is projected to average around 3 per cent in 2025.

Similarly, the services sector is expected to remain resilient, growing at an average of 6.6 percent over the medium term, the Treasury said.

The Treasury said ongoing reforms in the ICT sector are expected to boost growth in financial services, healthcare and public administration. The tourism sub-sectors are expected to benefit from the government's efforts to revamp the sector through the promotion of high-profile international conferences, cultural festivals and wildlife safaris.

The Treasury projected that aggregate domestic demand will remain resilient, with consumption averaging around 87.4 percent of gross domestic product in 2025, supported by easing inflationary pressures, Xinhua news agency reported.

Cabinet Secretary for the National Treasury and Economic Planning John Mbadi noted in the policy statement that the government would enhance fiscal consolidation to reduce public debt vulnerabilities while providing fiscal space to deliver essential public goods and services.