East African economy to expand by 5.1%

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The East African economy is projected to grow by 5.1 percent this year with Kenya, Rwanda and Tanzania leading the region’s economic momentum.

A report by audit, tax and consulting firm RSM (Eastern Africa) Consulting Ltd, dubbed “The East African Economic Outlook 2024” and presented during the EAC CEO Roundtable on Tuesday in Nairobi, reveals that the region will continue to lead Africa’s growth pace, expanding by 5.7 percent in 2025.

While Kenya's economy is expected to continue to improve, there are concerns about inflation, macroeconomic volatility and geopolitical conflicts.

“Kenya’s real GDP growth is projected to remain strong at 5.2 percent. Inflation is expected to slow down further, averaging around 6.5 percent in 2024, bringing it closer to the central bank's target range,” said Mr Ashif Kassam, executive chairman of RSM Eastern Africa.“The Central Bank of Kenya (CBK) is expected to keep the policy rate on hold at 13.00 percent over Q2-Q3 of 24, before cutting to 12.50 percent by year-end,” he added.

The EAC CEO Roundtable is organised by the East African Business Council (EABC) in partnership with Kenya Private Sector Alliance (Kepsa), Kenya Association of Manufacturers (KAM) and RSM.

“The service sector in both Kenya and Tanzania has been the driving force of economic growth in the region,” said John Bosco Kalisa, EABC executive director.“EAC services exports are dominated by the travel and other services categories representing more than two-thirds of total trade in services,” he added.

The regional economic forecast is also backed by a study by the African Development Bank (AfDB), which noted that the region has some of the fastest growing economies.

“Kenya was among the four EAC partner states in the top performing economies in Africa in 2023. It is also envisaged that EAC partner states will have a strong economic rebound, with an expectation to attain a GDP growth rate ranging from 4.1 percent to 7.2 percent,” said Annette Mutaawe Ssemuwemba, EAC Deputy Secretary-General for Customs, Trade, and Monetary Affairs.

Global shocks, however, continue to threaten regional economies.“The projected global economic slowdown from 3 percent in 2023 to 2.9 percent in 2024 may potentially dampen exports and foreign direct investment in both Kenya and in the region,” said Kepsa chairman Jas Bedi.“Global crises of conflict and climate change risks rise of commodity prices for energy and food leading to inflation,” he added.

Illicit trade, counterfeit and substandard goods, high cost of electricity and transport, and currency depreciation are among the issues that have led to the high cost of doing business in the region.