Kenya's economy has slowed down to a 4% growth rate in the third quarter of 2024, marking its lowest expansion in four years. According to the Kenya National Bureau of Statistics (KNBS), this decline is a significant drop from the 6% growth rate recorded in Q3 2023.

The slowdown is attributed to a tough macroeconomic environment, with most sectors contracting during the review period. The construction and mining sectors were particularly hard hit, with declines of 13.6% and 6%, respectively. This is despite President William Ruto's emphasis on construction, especially his affordable housing program, designed to tackle unemployment and the country's housing deficit.

The construction sector's decline is largely due to banks tightening credit in response to rising interest rates and increased economic risks, making funding for new projects scarce. Additionally, the government scaled back new road projects, further curtailing demand for key construction materials like cement, steel, and bitumen.

In the mining sector, the expected boost from lifting the 2023 moratorium has been undercut by delays in licensing, leading to a contraction in mining activities. Despite these sectoral declines, there were some positive macroeconomic indicators, including the Kenyan shilling appreciating against major currencies and inflation falling to 4.08%, its lowest level since the pandemic.

Some sectors, however, showed robust growth, including hospitality, which surged by 13.7%, logistics, which grew by 5.2%, real estate, which rose by 5.5%, and retail, which expanded by 4.8%. Financial services, insurance, and agriculture also posted positive growth, at 4.8% and 4.2%, respectively.

The World Bank has downgraded Kenya's 2024 growth forecast from 5% to 4.7%, citing fiscal challenges stemming from the country's debt burden, widespread anti-government protests, and destructive floods in certain regions. However, Kenya's Ministry of Finance remains optimistic, projecting a 5.2% growth in 2025, driven by agriculture, logistics, and retail.

Kenya's economic slowdown contrasts with stronger growth in neighboring Uganda, which posted a 6.7% expansion in Q3 2024, primarily driven by agriculture. Tanzania's economy also outpaced Kenya's, growing by 6.3% thanks to a booming tourism sector and increased investment in infrastructure projects like the ongoing railway development.

The slowdown is expected to have significant implications for jobs and consumer spending. The construction sector alone employs over 230,000 workers, mostly from low-income neighborhoods. Slower growth in agriculture and hospitality is expected to exacerbate unemployment and reduce consumer spending, particularly in rural areas where agriculture employs more than 40% of the workforce.

As Kenya's economy navigates these challenges, it remains to be seen how the government will respond to address the slowdown and stimulate growth. One thing is clear, however: the country's economic trajectory will have far-reaching implications for its citizens and the broader region.