Kenya Set to Reclaim Highest Ranks as East Africa’s Largest Economy

Kenya is poised to overtake Ethiopia as the region’s largest economy in 2025, following Addis Ababa’s decision to devalue the Birr under IMF loan conditions.

According to the IMF’s April 2025 World Economic Outlook, Kenya’s nominal GDP is projected to rise to $131.7 billion (Sh17.04 trillion), surpassing Ethiopia’s $117.5 billion (Sh15.2 trillion).

This marks the end of Ethiopia’s three-year lead, largely attributed to its previously overvalued currency which masked the true size of its economy. The Birr has fallen by over a third since July 2024 after Ethiopia shifted to a market-based exchange rate to unlock a $3.4 billion IMF bailout.

The move eased foreign exchange constraints, benefitting firms like Kenya Airways that struggled to repatriate earnings.

Kenya’s strengthened shilling, which gained 21% last year, along with strong diaspora remittances and export receipts, further boosted its economic outlook.

While Kenya’s GDP per capita is projected to rise to $2,467 (Sh319,328), Ethiopia’s is expected to drop to $1,066 (Sh130,060). The IME, however, forecasts slower growth for Kenya at 4.81% in 2025, but expects inflation to ease to 4.1%. Globally, growth is projected at 2.8%, down from 3.3%, as tariff wars and geopolitical uncertainties weigh on sentiment.