Mastercard Report: Kenya’s Economy Set for Growth in 2025 Amid Digital Transformation

Kenya’s economy is set for stable growth in 2025, navigating a shifting global economic landscape shaped by monetary adjustments, inflation stabilization, and increased digital integration. According to the Mastercard Economics Institute’s ‘Economic Outlook 2025’ report, the country’s Gross Domestic Product (GDP) is expected to grow by 4.7% year-over-year (YoY), outpacing the projected global average of 3.2%. This positive trajectory is backed by strong remittance inflows, a highly active female workforce, and the ongoing digital transformation of financial services.

Economic Growth: Stability and Consumer Confidence

Kenya’s GDP growth of 4.7% in 2025 represents an improvement over previous years, indicating a resilient economic structure that is adapting well to global and domestic challenges. Consumer spending, a vital pillar of economic growth, is expected to rise by 4%, signaling steady household confidence and sustained purchasing power.

Inflation, a key concern over the last five years, is predicted to stabilize at 4.8%, following a trend of global price moderation. This stabilization will provide much-needed relief to Kenyan households and businesses, particularly in essential sectors such as food, healthcare, and education. However, inflationary pressures will still influence consumer behavior, with a notable shift towards cost-conscious spending, where people may opt for more affordable alternatives rather than premium products.

The Role of Migration and Digital Remittances

A crucial component of Kenya’s economic resilience is the continued rise in remittance inflows, largely driven by migration trends. The report highlights that remittances have grown significantly over the years, making up 3.9% of Kenya’s GDP in 2023, compared to a pre-pandemic average of 2.3%. This underscores the essential role that diaspora remittances play in sustaining household incomes.

Moreover, Kenya’s robust mobile money infrastructure, led by M-Pesa, has revolutionized the way remittances are sent and received. The digitization of payments has enhanced cost efficiency, security, and convenience, allowing more Kenyans to benefit from seamless international transactions. With financial technology continuously evolving, the transition to digital remittances is expected to further boost economic participation among lower-income households.

Women’s Workforce Participation and the Rise of the ‘SHEconomy’

Kenya has one of the highest female labor force participation rates globally, standing at 72.5% as of 2022. The report attributes this trend to job creation in female-dominated industries such as healthcare, education, and retail, along with the rise of remote work, which provides greater flexibility for women balancing work and caregiving responsibilities.

The increased participation of women in the workforce has positive economic implications, contributing to higher household incomes and increased consumer spending. As more women enter and remain in the workforce, the economic impact will extend beyond individual earnings to broader economic stability and growth.

Digital Transformation Driving Financial Inclusion

Kenya’s reputation as Africa’s ‘Silicon Savannah’ continues to strengthen, with digital innovation playing a critical role in financial inclusion. According to Mastercard’s Senior Vice President and Country Manager for East Africa, Shehryar Ali, Kenya is leading the way in payment digitization, with Mastercard actively contributing to the transformation through contactless payments, tokenization, and wearable payment solutions.

One of the key developments in Kenya’s financial sector is the expansion of multi-currency prepaid cards, enabling more efficient cross-border transactions. This financial evolution is particularly beneficial for small and medium enterprises (SMEs) engaged in global commerce, providing them with cost-effective and secure digital payment solutions.

Global Context: Kenya’s Position in the Changing Economic Landscape

Kenya’s projected GDP growth of 4.7% in 2025 is significantly higher than that of many developed economies. For instance:

• United States: 2.3%
• United Kingdom: 1.2%
• Germany: 0.6%
• Japan: 1.2%

However, compared to fast-growing markets like India (6.6%) and Saudi Arabia (3.7%), Kenya’s growth remains moderate. The global economic landscape is increasingly defined by shifting trade policies, monetary adjustments, and evolving consumer spending habits.

One of the major risks facing the global economy in 2025 is geopolitical uncertainty, particularly in Europe, Asia, and the Middle East. Additionally, U.S. trade policies and potential tariff escalations could impact global supply chains, affecting economies that rely on trade. Kenya’s strategy of regional trade integration and digital innovation will be key in mitigating external shocks.

Key Takeaways: What to Expect in 2025

1. Stable Economic Growth: Kenya’s GDP is set to grow by 4.7%, surpassing global projections.
2. Controlled Inflation: Consumer price inflation will stabilize at 4.8%, offering relief from past volatility.
3. Consumer Spending Trends: 4% growth in spending, with a shift towards budget-friendly options.
4. Remittance Growth: Migration trends will continue to drive high remittance inflows, supporting household incomes.
5. Financial Innovation: Digital transformation in payments will expand financial access and enhance economic resilience.
6. Female Workforce Expansion: Increased women’s participation in the labor force will contribute to sustained economic momentum.
7. Potential Risks: Global trade tensions, monetary policy shifts, and geopolitical uncertainties could introduce new economic challenges.

Conclusion

Kenya’s economic outlook for 2025 presents a mix of optimism and caution. With steady GDP growth, controlled inflation, and expanding digital financial solutions, the country is well-positioned to navigate economic headwinds. However, global uncertainties, changing consumer behavior, and external trade dynamics will require adaptive policy measures to sustain growth and resilience.

The Mastercard Economic Outlook 2025 highlights Kenya’s strengths in innovation, financial inclusion, and workforce diversity, positioning the nation as a leader in sustainable economic transformation within the African region.