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Kenya is projected to surpass Ethiopia as East Africa’s biggest economy in 2025. New data from the International Monetary Fund shows that the IMF forecast Kenya GDP will reach $132 billion next year. $16.6 billion with additional World Bank support
New data from the International Monetary Fund shows that Kenya is projected to surpass Ethiopia as East Africa’s largest economy in 2025. The IMF said Kenya’s GDP forecast would reach $132 billion next year ahead of Ethiopia’s estimated $117 billion.
The shift is part of reforms to secure a $3.4 billion IMF programme and unlock $16.6 billion with additional World Bank support following the sharp devaluation of Ethiopia in July 2024. The 55% depreciation of BIRR was due to stabilization of external accounts increasing import costs and inflationary pressures.
In contrast, Kenya maintains a macroeconomic stability and a strong currency. Kenyan Shillings rated 21% in 2024. The country’s diversified economy and mature financial sector are helping to mitigate fiscal risk. Nevertheless, Kenya continues to face internal challenges, including tax hikes and protests that wiped out $600 million from the Nairobi Stock Exchange in 2023.
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Key takeout
Kenya’s lead in East Africa reflects currency dynamics over the short term. Its economy benefits from services, manufacturing and regional trade, but Ethiopia is heavily dependent on public infrastructure spending and agriculture. Ethiopia’s continued debt restructuring and post-conflict recovery are complex growth, but inflation continues to rise. In liberalizing the exchange rate, Ethiopia took steps to regain access to international markets, measured in dollar terms at short-term costs of consumer prices and GDP. Kenya’s economy is integrated into global markets, attracting consistent foreign investment, particularly in fintech, logistics and agriculture. Its financial system and monetary policy framework provide flexibility to absorb shocks. Both countries need to navigate the growing global uncertainty, including slower demand in major export markets and potential fallout from higher US tariffs. For Kenya, maintaining momentum requires a balance between fiscal reform and political stability. For Ethiopia, debt resolution and structural reform are key to regaining investor trust.
