EAC Achieves Trade Surplus in Q1 2025
The East African Community (EAC) has seen a significant shift in its trade dynamics, recording a trade surplus of $0.8 billion in the first quarter of 2025. This marks a sharp contrast to the $4.0 billion trade deficit experienced during the same period in 2024. The improvement is attributed to a surge in exports, stronger intra-African trade, and increased competitiveness among member states.
Total exports rose by 47.3 percent to reach $17.7 billion, while imports only increased by 4.6 percent to $16.8 billion. Domestic exports saw an impressive growth of 48.1 percent, and re-exports climbed by 32.4 percent, indicating strong performance in both locally produced and value-added goods.
Intra-African Trade Boosts Economic Growth
A key factor behind the positive trade balance is the expansion of intra-African trade. According to the EAC Quarterly Statistics Bulletin, trade within the continent grew by 53.9 percent to $9.5 billion, making up 27.5 percent of total EAC trade. Intra-EAC trade alone increased by 53.6 percent to $5.2 billion, highlighting progress in regional integration and the removal of trade barriers.
China remains the largest trading partner of the EAC, followed by the United Arab Emirates, India, South Africa, and Japan. Notably, the region recorded a trade surplus of $1.8 billion with China for the first time in recent reporting periods, driven by higher exports and a slight decline in imports. Other major export destinations include South Africa, Hong Kong, and Singapore.
Key Imports and Trade Composition
Despite the positive developments, certain sectors continue to dominate import activity. Petroleum products, vehicles, machinery, and plastics remain the primary imports. Meanwhile, base metals, minerals, agricultural goods, precious stones, and machinery accounted for over half of the total trade value.
Persistent Inflation Challenges
While trade figures are encouraging, inflation remains a pressing issue. Annual headline inflation across the EAC, measured by the Harmonised Consumer Price Index, stood at 27.0 percent in March 2025—down from 30.6 percent in February but still significantly higher than the 6.7 percent recorded in March 2024. Month-on-month headline inflation was 0.2 percent in March, compared to a decrease of 0.5 percent in February.
The annual average headline inflation for 2024 reached 13.5 percent, up from 6.3 percent in 2023. This increase is largely due to high price levels in South Sudan (99.9 percent) and Burundi (20.8 percent). Core inflation, excluding food and energy, reached 28.9 percent in March 2025. Food inflation eased slightly to 49.4 percent from 55.6 percent in February, while energy and utility inflation remained stable at 3.3 percent.
Monetary Trends and Credit Expansion
The Bulletin also highlights positive monetary trends. Broad money supply expanded by 10.1 percent in the first quarter, reflecting improved liquidity in partner states’ economies. This growth was supported by a 21.1 percent rise in net credit to government, signaling continued fiscal expansion, alongside a 5.5 percent increase in credit to the private sector, pointing to a gradual recovery in business activity.
Net foreign assets grew by 18.1 percent, driven by stronger external inflows, including remittances. Lending patterns varied across sectors: agricultural credit rose by 6.6 percent, construction by 17.5 percent, and real estate by 4.8 percent. Wholesale and retail trade received 9.6 percent more credit, while manufacturing saw marginal growth of just 0.5 percent.
Household Borrowing and Sectoral Loans
Households remained the largest borrowers, with outstanding loans totaling $13.8 billion. The wholesale and retail trade sector followed closely, with $7.9 billion in outstanding loans. These figures highlight the ongoing reliance on credit across various economic sectors.