Higher dollar inflows from agricultural exports, tourism, and diaspora remittances helped narrow the current account deficit to 1.6 percent of GDP in June from 1.8 percent in April, boosting the shilling and forex reserves held at the Central Bank of Kenya (CBK).
CBK Governor Kamau Thugge said on Wednesday that horticulture and coffee exports supported the inflow end of the account, helping balance the effect of higher imports of industrial supplies, including machinery.
Current account represents the balance of trade on goods and services—exports and imports, remittances, and tourism earnings. When in deficit, it shows that forex outflows from the country exceeded inflows, which, in Kenya’s case, reflects the fact that the nation is a net importer of goods.
“Goods exports increased by 7.7 percent in the 12 months to June due to higher domestic exports, particularly horticulture and coffee, vegetable oil, and clothing and accessories. For the full year, we expect goods exports to increase by six percent to $13.2 billion (Sh1.7 trillion),” said the CBK governor in a monetary policy committee briefing on Wednesday.
“With regards to imports, we saw an increase of 9.9 percent in the 12 months, due to intermediate imports of industrial supplies, machinery, and equipment. For the year, imports are expected to go up by 7.8 percent to $24 billion (Sh3.1 billion).”
By the end of the year, the CBK expects the current account deficit to climb slightly to 1.5 percent of GDP, or $2.07 billion (Sh267.5 billion), from 1.3 percent or $1.55 billion (Sh200.3 billion) in 2024.
The CBK earlier revised the 2024 current account deficit from four percent of GDP after new data uncovered higher export receipts than previously estimated.
The higher value was mainly due to improved capturing of data related to fuel re-exports, travel, and financial services.
Other components of the current account also went up in the 12 months to June 2025, including service and travel receipts by 20 percent and 21 percent, respectively.
Diaspora remittances, meanwhile, rose by 12.1 percent to $5.08 billion (Sh656 billion) in the year to June, and are projected to grow by six percent to $5.2 billion (Sh672 billion) for the 2025 calendar year.
“Remittances remain resilient despite increased global uncertainty, supported by diversified source countries,” said Dr Thugge.
The current account is the biggest component in the overall balance of payments, which is a measure of the total economic or monetary transactions of the economy with the rest of the world.
The other main components of the balance of payments are the capital account, which measures major capital movements including foreign direct investment and foreign loans, and the financial account, which measures portfolio inflows into the stock and bonds markets.
The relatively low current account deficit, coupled with healthy capital inflows, is expected to yield an overall balance of payments (BOP) surplus of $673 million (Sh87 billion), which will help the CBK add to its forex reserves, which currently stand at $10.9 billion (Sh1.4 trillion).
In 2024, BOP surplus stood at $1.5 billion, given that overall inflows of $3 billion—partly supported by concessional loans by the World Bank and IMF— were enough to cover the current account deficit of $1.55 billion.
