Kenya: Treasury Reverses 2026 Economic Growth From 5.3pc to 5pc

What the report says

AllAfrica, carrying a Capital FM report from Nairobi dated July 23, 2026, reported that Kenya’s National Treasury has lowered its 2026 economic growth projection to 5 percent from an earlier 5.3 percent. Treasury Principal Secretary Chris Kiptoo said the outlook remains positive but is being tempered by global uncertainty, including disruptions linked to conflict in the Middle East that have raised fuel prices, affected supply chains and weakened external demand.

According to the report, the Treasury expects growth to edge up to 5.1 percent in 2027 and 5.2 percent in 2028. Kiptoo, speaking during the launch of the 2027/28 budget preparation process, said activity is being supported by agriculture, financial services, manufacturing, construction and tourism. The economy grew 5.3 percent in the first quarter of 2026, with accommodation and food services expanding fastest at 14.7 percent, helped by increased international tourist arrivals. Manufacturing also improved, supported by higher output of products including cement, sugar, milk, soft drinks and locally assembled vehicles.

Capital FM reported that Treasury pointed to improving macroeconomic conditions, including a Central Bank Rate of 8.75 percent, down from 13 percent in 2024, easing commercial lending rates and private sector credit growth of 9.3 percent. Kenya’s external position was also described as stronger, with foreign exchange reserves of $14.1 billion, equal to six months of import cover, and the shilling relatively stable at about Sh129.5 to the dollar.

The revised forecast matters for budget planning because the Treasury also flagged fiscal pressures. Revenue for 2025/26 was Sh90.1 billion below target, while spending was Sh190.4 billion under target due to lower absorption. Although the deficit narrowed to 6.7 percent of GDP, Treasury said this reflected weaker spending rather than stronger revenue, with risks including weak tax collections, wage costs, emergency flood and drought spending, and higher financing needs.