Mastercard Economics Institute’s 2025 Economic Outlook for Kenya

• Kenya’s GDP is projected to grow by 4.7% year over year, consumer spending is predicted to rise by 4%, and consumer price inflation is likely to stabilize at 4.8%
• Migration is leading to a rise in remittances, with the continued digitization of the payments industry bringing cost efficiencies, security and convenience
• The participation of women in the workforce remains high, driven by job creation in female-dominated sectors and flexible work policies

The Mastercard Economics Institute released ‘Economic Outlook 2025’, its annual report identifying the themes that will shape next year’s economic landscape. The global economy has managed through a series of shocks admirably over the past few years. The report anticipates 2025 to be defined by shifts in monetary and fiscal policy and a move toward equilibrium rates for growth and inflation.

In Kenya, the GDP in 2025 is projected to grow by 4.7% year over year, outpacing the global average which is forecast at 3.2.% – a modest increase on 3.1% in 2024. Meanwhile, consumer spending in the country is predicted to rise by 4%, and consumer price inflation is likely to stabilize at 4.8%, offering much-needed relief to households and businesses.

Economic growth is supported by a robust remittance ecosystem and high female labor force participation, which continues to drive household incomes. Kenya’s economy demonstrates resilience amid global shifts, leveraging digital innovation and regional trade integration to sustain progress.

“Kenya’s economic outlook for 2025 highlights its potential for robust growth, underpinned by high remittance inflows, active female workforce participation, and digital transformation. These trends position the country as a leader in fostering inclusive and sustainable development,” said Khatija Haque, chief economist, EEMEA, Mastercard.

Shehryar Ali, Senior Vice President and Country Manager for East Africa and Indian Ocean Islands at Mastercard, shared, “Kenya’s digital evolution is accelerating at a fast pace, and Mastercard is committed to driving this transformation. As the ‘Silicon Savannah,’ Kenya leads in innovation, and we’re enhancing acceptance with tokenization, wearables, and contactless payments. These solutions, along with our first multi-currency prepaid card, streamline payments and empower communities to engage confidently in global commerce.”

Key findings from the report include:

Pricing priorities

Consumers worldwide have been navigating a bumpy road of rising prices over the last five years, largely driven by the pandemic and geopolitical tensions. While inflation—the rate of increase in prices—has slowed significantly, price levels themselves remain elevated. In Kenya, inflation is forecast to stabilize at 4.8% in 2025, reflecting global trends.

This moderation creates opportunities for sustained consumer spending, particularly in essential sectors such as food, healthcare, and education. However, lingering price pressures continue to influence consumer behavior, with households opting for more affordable versions of discretionary items. This trend of ‘trading down’ is reflected in Kenya’s real consumer spending growth, projected at 4% in 2025, aligning with global purchasing behaviors.

Migration and money

The last few years have seen significant movement in people and, by extension, capital. Migration, while resulting in a loss of human capital, also generates substantial remittances, which serve as a lifeline for low- and middle-income communities in developing economies. According to the World Bank, global remittances surged from $128 billion in 2000 to $857 billion in 2023, with an estimated growth of 3% in 2024 and 2025. Economic recovery and local reforms are expected to sustain remittance growth through 2025, while the continued digitization of the payments industry allows recipients to shift to digital and mobile channels, resulting in considerable cost efficiencies, security and convenience.  

In Kenya, migration continues to shape the country’s economic landscape, significantly contributing to remittance inflows. In 2023, remittances accounted for 3.9% of GDP, up from a pre-pandemic average of 2.3%, underscoring their critical role in supporting household incomes and economic resilience. Kenya’s robust mobile money infrastructure, led by platforms like M-Pesa, further enhances the efficiency and accessibility of remittances. These platforms facilitate secure and convenient cross-border transactions, reducing costs and empowering underserved communities.

The rise of the SHEconomy

The global economy saw the ‘great resignation’ turn into the ‘great return’. To varying degrees across countries, there has been a return of workers, particularly in the younger cohort and, interestingly, women. Women’s workforce participation in Kenya reflects this important and steady transformation aligning with global patterns where women’s workforce participation has exceeded pre-pandemic levels in many regions.

In Kenya, the female labor force participation rate stood at 72.5% in 2022, one of the highest rates globally. There are several potential explanations for this phenomenon. One, women’s labor force participation likely reflects the disproportionate job creation in female-dominated sectors, such as healthcare and education. In addition, the rise of remote work and the flexibility it brings tends to help women, who are often still the primary caregivers, as it makes it easier to raise children while working. Many of these dynamics will remain true in 2025, with positive implications for the economy due to driving consumption growth by increasing households’ disposable incomes

The ‘Economic Outlook 2025’ report draws on a multitude of public and proprietary data sets, including aggregated and anonymized Mastercard sales activity, as well as models that are intended to estimate economic activity.