By CPA Peter Kibet Kitur
Kenya’s economy demonstrated notable resilience, as reflected in its trajectory from 2023 amid shifting global and domestic conditions. While growth moderated from the previous year, the country sustained expansion across key sectors, including agriculture, financial services, transportation, and real estate. Recent reports from the Kenya National Bureau of Statistics (KNBS) show improvements in trade balances and export performance, underscoring a diversified economic base. As Kenya moves deep into 2026, its outlook is shaped by both domestic developments and broader global forces — including technological shifts, geopolitical tensions, and environmental challenges. Understanding how these dynamics interact is critical to appreciating Kenya’s evolving economic trajectory and identifying the opportunities and risks ahead.
Economic activity in Kenya continues to reflect a combination of domestic strengths and global pressures. According to the Kenya National Bureau of Statistics (KNBS) 2025 economic report, Kenya’s real Gross Domestic Product (GDP) grew by 4.7 per cent in 2024, compared with 5.7 per cent in 2023, demonstrating a moderation in growth but maintaining resilience. Key contributors included Agriculture, Forestry & Fishing (4.6%), Financial & Insurance Activities (7.6%), Transportation & Storage (4.4%), and Real Estate (5.3%), which collectively anchored the economy amid global uncertainties. Trade activity also improved: Kenya’s total trade volume rose to KSh 3.8 trillion in 2024, with exports reaching KSh 1.1 trillion, driven by tea, coffee, apparel, oils, fruits, and jet fuel re-exports. Imports totalled KSh 2.7 trillion, including machinery, telecom equipment, plastics, rice, and aircraft. With exports outpacing imports, the trade deficit narrowed to KSh 1.594 trillion, and the export-import cover ratio improved to 41.1 per cent, illustrating a strengthening external position and improving foreign exchange resilience.
Looking ahead, the Kenyan economy is expected to maintain a steady trajectory in 2026. According to the International Monetary Fund (IMF) and World Bank projections, GDP growth is likely to range from 4.9 per cent to 5.0 per cent, while forecasts from the Central Bank of Kenya (CBK) and the National Treasury indicate a slightly higher range of 5.3–5.5 per cent. Growth is expected to be supported by a recovering agricultural sector, increased efficiency in services, and a gradual easing of monetary policy, which will lower credit costs. Inflation is projected to remain stable at 4.8–5.2 per cent, and the Kenyan shilling is expected to trade between KSh 129 and KSh 132 against the US dollar. Despite positive projections, gross public debt is likely to remain around 70 per cent of GDP, continuing to influence fiscal decisions. Observers note that careful debt management, along with the recent launch of the National Infrastructure Fund, will play a key role in sustaining growth while channelling investments into strategic transport, housing, and energy projects.
Several structural factors underpin the expected growth momentum. Agricultural productivity is anticipated to improve due to favourable weather and government support, including fertiliser subsidies and investments in irrigation and extension programs. The increasing adoption of digital technologies and artificial intelligence across industries is expected to boost efficiency, particularly among small and medium-sized enterprises (SMEs) in the services sector. Infrastructure expansion, including government spending exceeding KSh 500 billion, coupled with the launch of the National Infrastructure Fund, is projected to enhance connectivity and stimulate construction and related industries. Meanwhile, the sale of government-held Safaricom shares is expected to raise capital for public projects and diversify investment opportunities. Strengthening trade relationships with emerging markets in Asia and the Middle East, alongside the extension of AGOA (African Growth and Opportunity Act), is also likely to support export growth. According to Mastercard’s 2025 Kenya Economic Outlook, these factors position Kenya to modernise infrastructure while leveraging regional trade and investment opportunities.
Key risks could temper this momentum. Fiscal assessments from the National Treasury emphasise that Kenya’s high debt-to-revenue ratio limits funding for critical projects, while global volatility—including fuel price fluctuations and potential supply chain disruptions—remains a vulnerability. Domestically, the approach of the 2027 general elections has intensified political tensions, with rising confrontations between opposition and government supporters creating uncertainty that could dampen consumer spending and investment in the short term. Uneven rainfall patterns and the potential for droughts also pose risks to agricultural output. These considerations highlight the delicate balance between opportunity and risk, especially as Kenya seeks to diversify its economic base while maintaining fiscal discipline.
Kenya’s national outlook is intertwined with broader global trends. The IMF World Economic Outlook Update (January 2026) projects global growth at 3.3 per cent in 2026 and 3.2 per cent in 2027, reflecting resilience amid mixed headwinds. Technological investments, particularly in artificial intelligence, are driving productivity in select sectors, while uncertainties from shifting trade policies, financial market fluctuations, and geopolitical tensions continue to influence growth. Global inflation is projected to ease gradually, though adjustment rates differ across regions, with advanced economies such as the US converging more slowly toward targets than emerging markets. These global dynamics directly affect Kenya through trade linkages, capital flows, and inflationary pressures, underscoring the interconnectedness of domestic and international economic conditions.
Geopolitical tensions further complicate the economic landscape. Conflicts involving Iran and Israel have disrupted energy markets, contributing to price volatility that reverberates globally. Similarly, the prolonged war between Russia and Ukraine continues to affect the availability and cost of commodities, including grain, fertiliser, and energy. According to the World Bank’s 2025 Commodity Markets Outlook, these disruptions are increasing production costs and inflation pressures worldwide, affecting countries like Kenya that are dependent on imports. Consequently, fluctuations in fuel and grain prices directly affect transportation costs, food prices, and household expenditures.
Environmental factors have also affected domestic economic outcomes. Heavy rainfall and widespread flooding in parts of Kenya have disrupted agricultural production, damaged infrastructure, and strained supply chains, particularly in rural and flood-prone areas. These conditions underscore the role of climate variability in shaping short-term economic performance in a country where agriculture contributes substantially to GDP and employment. According to the KNBS 2025 Climate and Agriculture Report, ponding and soil erosion may temporarily reduce yields in maize, horticulture, and tea production, underscoring the need for strategic planning to ensure food security and economic continuity. Combined with global headwinds, such environmental challenges further emphasise the complexity of sustaining growth.
Both domestic and global dynamics present potential opportunities for strategic gains. Investments in technology, AI adoption, and digital transformation could boost productivity across sectors, while infrastructure projects financed through the National Infrastructure Fund and proceeds from the Safaricom share sale could enhance competitiveness and market access. Fiscal prudence, debt monitoring, and resilience planning to manage climatic, political, and geopolitical shocks remain critical for sustaining momentum. Taken together, Kenya’s economic outlook reflects a careful balancing of domestic policy, structural growth drivers, and global conditions, suggesting moderate but resilient growth in 2026 despite persistent uncertainties and emerging challenges ahead of the 2027 general elections.
Conclusion
Kenya’s economic outlook for 2026 reflects a complex but largely hopeful narrative. Domestic performance — supported by strong sectoral contributions, expanding trade activity, and ongoing infrastructure and digital transformation — shows the country’s ability to adapt in a volatile global context. At the same time, persistent challenges such as fiscal constraints, geopolitical tensions, and climate pressures highlight the layered uncertainties that Kenya and many developing economies continue to navigate. Looking forward, the interplay between internal reforms and external conditions will be pivotal in shaping resilience and longterm growth. While global headwinds persist, strategic investments in technology, strengthened trade ties, and prudent economic management offer pathways for sustained progress and greater stability in the years ahead.
CPA Peter Kibet Kitur is an Associate Partner with Bon and Drew Associates, chairs a public
entity audit committee, is the ICPAK Central Rift Region’s Immediate Branch Chairman and
a member of ICPAK’s Devolution subcommittee.
