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The World Bank expects 5% growth in 2026, slower than the 5.3% it had estimated earlier citing further fiscal slippages, extreme weather events, and external economic challenges as the main risks
The World Bank has downgraded Kenya’s economic growth forecast for the year to 4.7% from an initial 5% forecast in June 2024 – all lower than the 5.6% recorded in 2023. The downward revision to pre-pandemic average levels was driven by the severe floods in April and the deadly anti-Finance Bill protests in June.
The World Bank expects 5% growth in 2026, slower than the 5.3% it had estimated earlier citing further fiscal slippages, extreme weather events, and external economic challenges as the main risks.
The revised estimate, however, remains above the 3% Sub-Saharan Africa average with the Washington-based lender positive that fiscal discipline and prudent debt management will be critical for long-term stability.
In the economic update report, published twice a year, the World Bank noted that missed revenue targets continue to ail the budgeting process, owing to the overly optimistic revenue targets leading to budget shortfalls. Higher debt servicing costs from the increased reliance on high interest rates and domestic borrowing has put pressure on the fiscal space with Kenya still facing high risks of debt distress.
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The report noted that business confidence remained subdued in the year with jittery sentiments in the private sector growth. Further, the severe floods in April affected the livelihood of households, mostly in urban areas, limiting growth in private consumption. The construction sector was affected by the high real interest rates amid the weaker housing demand, which negatively impacted the headline growth.
