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

What the report says

AllAfrica, carrying a Capital FM report from Nairobi, says 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 presented the outlook during the launch of the 2027/28 budget preparation process, attributing the downgrade to global headwinds linked to the Middle East conflict, including higher fuel prices, supply chain disruption and weaker external demand.

The Treasury still expects growth to edge up in the following years, projecting 5.1 percent in 2027 and 5.2 percent in 2028. Kiptoo said the economy is being supported by agriculture, financial services, manufacturing, construction and tourism. The report said Kenya’s economy grew 5.3 percent in the first quarter of 2026, with accommodation and food services expanding fastest at 14.7 percent amid higher international tourist arrivals. Manufacturing also improved, supported by increased output of items including cement, sugar, milk, soft drinks and locally assembled vehicles.

Capital FM reported that macroeconomic indicators have improved, with the Central Bank Rate down to 8.75 percent from 13 percent in 2024, softer commercial lending rates and private sector credit growth of 9.3 percent, especially in agriculture, trade and construction. Kenya’s external position was described as stronger, helped by exports, remittances and foreign exchange reserves of $14.1 billion, or about six months of import cover, while the shilling was near Sh129.5 to the dollar.

The outlook remains constrained by fiscal pressures. Treasury said 2025/26 revenue missed target by Sh90.1 billion, while spending was Sh190.4 billion below target because of lower absorption. Although the deficit narrowed to 6.7 percent of GDP, the improvement was mainly due to reduced expenditure rather than stronger revenue collection.