Kenya’s Economic Growth Rate to hit 4.9% in 2026-IMF Forecast

Kenya’s Economic Growth Rate is projected to accelerate to 4.9% in 2026, above Sub-Saharan Africa’s 4.6 per cent, According to the latest estimates by the International Monetary Fund(IMF).

This modest growth is driven by growth in agriculture and Service sectors as well as positive investor sentiments and easing of financial conditions, including easing of Central Bank Rate(CBR).

Kenya’s somewhat sluggish growth momentum happens even as the Country enters the 18 months’ period as the August 2027 polls count down begins, with President William Ruto seeking for re-election and facing disjointed opposition.

In 2026, Kenya’s economy faces several challenges, the biggest being high public debt. Around 65% of revenues is now allocated to servicing both domestic and foreign debt, cutting of expenditure on crucial sectors.

The East African Nation’s fiscal deficit is projected to widen to 5.1% of GDP in 2026, reflecting low export earnings and sluggish revenue collection.

Global tensions are expected to hit Kenya’s export sector as well as financial market corrections. While the CBK has been aggressive in lowering the benchmark lending rates, banks are still slow to respond and remain cautious, the stance affecting availability of affordable credit especially to small businesses.

IMF says in its January World Economic Outlook that technology investment (including AI), fiscal and monetary support, accommodative financial conditions and private sector adaptability are expected to offset trade policy shifts, mainly recent tariffs by US President Donald Trump’s administration, which have disrupted international trade patterns.

“Global inflation is expected to fall, but US inflation will return to target more gradually. Key downside risks are re-evaluation of technology expectations and escalation of geopolitical tensions,” IMF says in the report.

The Country’s growth forecast by the Central Bank of Kenya (CBK) is 5.2 per cent in 2025 and a further growth of 5.5 per cent this year, placing it above IMF’s projections.

This growth is expected to be supported by continued resilience of key service sectors and agriculture, and the continued recovery of the industry sector.

“The outlook is however subject to risks, including adverse weather conditions, elevated trade policy uncertainties, and geopolitical tensions,” CBK governor Kamau Thugge said during a post-Monetary Policy Committee briefing on December 9^th 2026.

Private sector credit is rebounding, growing five per cent% year-on-year by September 2025, supported by lower lending rates and an accommodative monetary stance.

“Economic growth momentum could be further sustained by addressing key barriers to competition, which would also lead to more and better paying jobs, and lower prices to consumers,” said Qimiao Fan, World Bank Division Director for Kenya, Rwanda, Somalia, and Uganda.

Kenya’s economic growth forecast by KNBS

The economy defied erratic weather and policy uncertainties to grow 4.9% in Q3 2025, Kenya National Bureau of Statistics latest data shows, supported mainly by a rebound of the construction sector, mining and growth in manufacturing and transport sectors.

This was an improvement compared to the 4.2 per cent growth recorded in the third quarter of 2024, as the economy continued on a post-pandemic growth trajectory despite both domestic and global shocks.

The country’s economic growth faces several hurdles among them high national debt, fiscal deficits, rising cost of living, unemployment (especially youth), climate vulnerability and weak revenue collection, alongside structural issues like inequality and slow industrialisation.

The latest Quarterly Gross Domestic Product Report by KNBS however points to Kenya’s strong macroeconomic environment, pegged on low interest rates in the market, stable inflation and string national productivity mainly in key sectors of the economy.

The IMF has upgraded its growth forecast for sub-Saharan African economies, now expecting growth of 4.6% this year, following a 4.4% expansion recorded last year.

“Growth is expected to accelerate in sub-Saharan Africa, from 4.4% in 2025 to 4.6% in 2026 and 2027, supported by macroeconomic stabilisation and reform efforts in major economies,” reads the report on the update of the World Economic Outlook, published in Brussels.

Globally, the IMF projects growth to remain resilient at 3.3% in 2026 and 3.2% in 2027, representing a small upward revision of 0.2 percentage points for 2026 and no change for 2027 compared with the October 2025 edition.

This steady performance results from “a balance of divergent forces,” the Fund notes, explaining that “obstacles arising from changes in trade policies are offset by favourable factors from increased technology-related investments, including artificial intelligence (AI), especially in North America and Asia.”

Additionally, the impact of fiscal and monetary support, broadly favourable financial conditions, and the adaptability of the private sector are also highlighted.

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