Kenyan President William Ruto
|Published 7:45 PM ET, Saturday April 26, 2025|
Nairobi — Kenya is poised to reclaim its position as East Africa’s largest economy in 2025, overtaking Ethiopia, according to new projections released by the International Monetary Fund (IMF).
The IMF’s latest World Economic Outlook forecasts Kenya’s gross domestic product (GDP) will expand to $118.1 billion next year, surpassing Ethiopia’s expected GDP of $117.4 billion. This shift reflects Kenya’s resilience in the face of global economic headwinds and the lingering effects of Ethiopia’s internal conflicts, which have weighed heavily on its economic growth.
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Ethiopia had previously outpaced Kenya in 2023, driven by a decade of rapid infrastructural investments and population-led economic expansion. However, the IMF notes that Kenya’s diversified economy, robust services sector, and continued investment in infrastructure and digital transformation are positioning it for stronger medium-term growth.
“Kenya’s economy has demonstrated notable adaptability, supported by reforms in public finance, a rebound in tourism, and growth in key sectors such as technology and agriculture,” the IMF report stated.
Meanwhile, Ethiopia’s recovery has been tempered by post-conflict reconstruction challenges, a foreign exchange shortage, and inflationary pressures, all of which have constrained economic momentum.
Experts believe Kenya’s anticipated rise could reshape regional economic dynamics, boosting Nairobi’s influence as an investment and innovation hub across East Africa.
The IMF also projects that Tanzania will continue its steady growth trajectory, maintaining its position as the region’s third-largest economy.
As the global economic landscape evolves, Kenya’s strategic focus on digital economy initiatives, green energy projects, and regional trade integration under the African Continental Free Trade Area (AfCFTA) is expected to further solidify its economic leadership in East Africa.
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