Kenya’s economy projected to grow by 5.3% in 2026 despite global headwinds
By Faith Lagat, April 11, 2026Kenya’s economy is projected to grow by 5.3 per cent in 2026, according to the Central Bank of Kenya (CBK), even as global uncertainties linked to conflict in the Middle East push up energy prices and disrupt supply chains.
The projection represents a slight revision from an earlier estimate of 5.5 per cent, reflecting external risks that could affect global trade and commodity prices.
The forecast was issued after the Monetary Policy Committee (MPC), chaired by CBK Governor Dr Kamau Thugge, met on April 8, 2026, to review economic conditions.
The committee resolved to retain the Central Bank Rate (CBR) at 8.75 per cent, maintaining the current policy stance aimed at keeping inflation stable and supporting exchange rate stability.
Monetary policy and inflation outlook
The MPC noted that Kenya’s inflation rate remained within the government’s target band of 5 ± 2.5 per cent. Inflation stood at 4.4 per cent in March 2026, compared to 4.3 per cent in February.
Core inflation remained stable at about 2.1 per cent, supported by lower prices of processed foods, including sugar and maize flour.
“Overall inflation was broadly stable at 4.4 per cent in March 2026 compared to 4.3 per cent in February, and remained below the midpoint (5.0 per cent) of the 5±2.5 per cent target range.”
Non-core inflation rose slightly due to higher vegetable prices, although favourable weather conditions are expected to support food supply and moderate prices in the coming months.
Private sector credit growth improved to 8.1 per cent in March 2026, reflecting stronger demand for loans and a decline in average lending rates.
The MPC stated that the current policy stance remains appropriate but will continue to monitor potential inflationary pressures arising from higher global oil prices. The committee is scheduled to meet again in June 2026 to review economic conditions.
Global economic pressures
Globally, economic conditions have become more uncertain due to the Middle East conflict, which has driven up international oil prices and increased fertiliser costs. Disruptions to supply routes and infrastructure have also contributed to volatility in energy markets.
Before the escalation of the conflict, global growth was projected at about 3.3 per cent in 2026. However, analysts now expect growth to moderate due to rising inflation, weaker demand, and continued uncertainty in global markets.
Central banks in major economies have largely maintained policy rates as they assess the impact of rising energy costs. Financial markets have also experienced tighter conditions, with equity prices declining, Eurobond yields rising in emerging markets, and the US dollar strengthening against several global currencies.
Domestic economic performance and outlook
Despite global pressures, Kenya’s domestic economy has maintained steady momentum. Real GDP growth is estimated at 5.0 per cent for 2025, an improvement from 4.7 per cent recorded in 2024, supported by stronger performance in industry and services.
For 2026, economic activity is expected to benefit from improved agricultural production due to favourable weather conditions, continued infrastructure development, and growth in digital services and e-commerce.
The construction sector is also expected to gain from ongoing infrastructure projects and the affordable housing programme.
Tourism has continued to recover, with international arrivals increasing by 7.2 per cent in the 12 months to February 2026.
The Kenyan shilling has remained broadly stable, supported by foreign exchange reserves providing more than five months of import cover and continued inflows such as diaspora remittances.
The current account deficit is projected to widen to about 3.0 per cent of GDP in 2026, mainly due to higher oil import costs. However, the deficit is expected to be fully financed by financial inflows.
The banking sector remains stable, with capital and liquidity levels above statutory requirements and gross non-performing loans standing at 15.6 per cent as of March 2026.