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Kenya’s economy will grow by 4.3 per cent in 2026 and 4.4 per cent in 2027, according to the World Bank’s latest economic update released on Thursday.
The bank downgraded its near-term outlook for East Africa’s largest economy by 0.6 percentage points compared to its previous November forecast, primarily blaming the international conflict in Iran for driving up global oil prices and production costs.
The updated figures reflect a slowdown from the 4.6 per cent economic expansion recorded in 2024 and fall short of the Kenyan finance ministry’s targets of 5.0 per cent and 5.2 per cent for the respective years.
The report warns that soaring petroleum prices and shipping bottlenecks around the Strait of Hormuz will continue to squeeze household purchasing power and depress private investment.
These Middle East trade disruptions could increase the national poverty rate by 2 to 4.5 percentage points, threatening to push an additional 1 million to 2.4 million Kenyans below the $3-a-day poverty line.
Furthermore, the country faces domestic economic headwinds, including climate-related shocks and mounting political uncertainty ahead of the August 2027 general elections.
The World Bank noted that the upcoming electoral cycle might delay private sector investment decisions and weaken fiscal discipline due to pre-election spending pressures.
However, healthy agricultural harvests, a stable currency exchange rate, and a recent $1.25 billion World Bank financial package will help cushion the economy and reduce Kenya’s reliance on expensive domestic debt.
