Kenya, Ethiopia Lead East Africa Debt, Inflation Differences 2025

Kenya is projected to experience moderate inflation and robust economic growth in 2025, with annual inflation holding steady at 3.8%, below the Central Bank's midpoint target of 5%. Inflation has remained subdued since mid-2024, supported by stable food and energy prices, although concerns about slower private sector borrowing and cautious consumer spending persist. East Africa overall is expected to be a top economic performer in 2025, with a regional GDP growth rate of 6.3%, driven by foreign direct investment, infrastructure spending, and intra-regional trade. Kenya and Ethiopia face contrasting inflation scenarios, with Ethiopia's inflation expected to surge to 19.1%, while Tanzania and Uganda maintain low inflation rates of 3.4% and 3.8%, respectively. Public debt remains a concern in the region, with Kenya among the countries with the highest debt-to-GDP ratios, as government borrowing increases to finance development. Meanwhile, Indonesia reported a low annual inflation rate of 1.87% in June, slightly above expectations, with its central bank maintaining accommodative monetary policy to support economic activity.