The numbers are in, and they tell a story of remarkable resilience. Kenya’s economy grew by 4.9% in the third quarter of 2025, a significant acceleration from the 4.2% recorded in the same period last year. This growth, detailed in the latest Quarterly Gross Domestic Product Report by the Kenya National Bureau of Statistics (KNBS), is not just a statistical blip; it marks the beginning of a structural recovery driven by a roaring industrial sector and a stabilizing currency.

For the past two years, Kenya’s growth has been largely agrarian—dependent on whether the rains fell in Kitale or failed in Wajir. But Q3 2025 signals a pivot. The engine of growth has shifted from the farm to the factory, with the construction and manufacturing sectors posting their strongest numbers since the post-pandemic rebound.

Sector-by-Sector Breakdown

The KNBS data paints a picture of uneven but robust recovery:

• Construction (6.7%): This is the star performer. After contracting by 2.6% in Q3 2024, the sector swung back to positive territory, growing by 6.7%. The catalyst? The government’s decision to unlock billions in pending bills for stalled road projects (like the Mau Mau Road) and the Affordable Housing Program, which is now consuming cement at a rate of 2.6 million tonnes per quarter.
• Mining and Quarrying (16.6%): Recovering from a 12.2% contraction, mining surged by 16.6%. This is directly linked to the reopening of fluorspar mines in Elgeyo Marakwet and the export of titanium from Kwale, alongside the demand for quarry stones for the housing boom.
• Agriculture (3.2%): The backbone of the economy slowed down. Growth decelerated from 4.0% in 2024 to 3.2% in 2025. While milk deliveries rose by 9.7% and cut flower exports surged by 36.2%, the sector was weighed down by a sharp drop in coffee exports (down to 8,312 tonnes from 17,732 tonnes) and tea production, which dipped by 2.8% due to localized dry spells.

The "Shilling Shield"

A critical enabler of this growth has been the stability of the Kenyan Shilling. Exchanging at 128.99 against the US Dollar, the currency has appreciated by 13.6% compared to the same period in 2024. This stability has:

• Lowered Debt Costs: External debt service has become cheaper, giving the Treasury breathing room to release development funds.
• Reduced Import Bills: Manufacturers importing raw materials (steel, clinker, petroleum) are paying less, improving margins and encouraging expansion. Iron and steel imports, a key indicator of industrial activity, rose to 336,262 metric tonnes.

The Inflation Paradox

Despite the growth, the man on the street is still hurting. Inflation edged up slightly to 4.42% from 4.08%, driven by food and non-alcoholic beverages. "The GDP is growing, but the ugali is not getting cheaper fast enough," noted economic analyst Mihr Thakar. The disparity between headline growth and household reality remains the government’s biggest political headache.

Future Outlook: The 2026 Bull Run?

The Central Bank of Kenya (CBK) remains optimistic. With the Central Bank Rate (CBR) cut to 9.5% in late 2025, credit to the private sector is expected to pick up. The bond market is already responding, with turnover increasing by 5.96% as investors lock in yields.

However, risks loom. The widening current account deficit—driven by the very machinery imports fueling the industrial boom—could pressure the shilling if exports don't catch up. Geopolitical shocks, such as the Venezuela oil crisis, could also spike energy costs.

For now, Kenya has dodged the recession bullet. The economy is back on its feet, but it is not yet running. The challenge for 2026 is to ensure that the 4.9% growth trickles down from the cement mixers to the shopping baskets.