Kenya is poised to grow economically despite tough global rescission conditions facing many countries around the world.
A fresh report, that could give hope to investors and economic pundits suggest that Kenya’s economy is expected to remain resilient in 2026, supported by stronger trade ties with emerging markets and rising digital adoption.
All these is according to the latest outlook by the Mastercard Economics Institute.
The Mastercard Economics Institute’s 2026 Economic Outlook says Kenya is well placed to sustain economic momentum despite a challenging global environment.
The report highlights solid domestic demand, expanding digital inclusion and more diversified trade relationships as key strengths.As global supply chains reorganize, Kenya is increasing trade with emerging markets in Asia and the Middle East.
The report also notes that small and medium-sized enterprises remain critical, with digital tools and technology helping businesses cut costs, improve efficiency and compete more effectively.Digital transformation, including the adoption of artificial intelligence, alongside infrastructure investment, is expected to further strengthen productivity and long-term growth.
Globally, the institute expects economic growth to ease slightly in 2026, with lower inflation and continued expansion driven by technology.While trade fragmentation poses risks, rising AI adoption and flexible economies are expected to support global growth, even as gains remain uneven across regions.
Kenya is headed into 2026 with a cautiously optimistic economic outlook, buoyed by easing domestic borrowing costs, a firmer export base, strengthening household spending, and improving investor sentiment.
Yet the global environment remains uncertain, shaped by geopolitical realignments, shifting trade regimes, technological change, and volatile financial markets.
How Kenya navigates the interplay between its domestic reforms and rapidly changing global dynamics will determine whether 2026 becomes a year of sustained recovery or one constrained by external factors.At the centre of Kenya’s improving prospects are projections from the December 2025 Focus Economics Consensus Forecast, which places the country’s GDP growth at 5.0 percent in 2026, slightly above an estimated 4.9 percent in 2025.
This projection positions Kenya above the Sub-Saharan African average of 4.1 percent, reflecting its relatively resilient and diversified economy. Analysts attribute this momentum largely to the Central Bank of Kenya’s (CBK) continued easing of monetary policy.
Since February 2025, the CBK has lowered its base lending rate from 11.25 percent to 9.50 percent, marking seven consecutive rate cuts aimed at stimulating credit expansion, supporting investment, and relieving household financial pressures.
The Economist Intelligence Unit (EIU) notes that this monetary pivot is already influencing investment patterns.
“In 2025, economic growth should strengthen as accelerating fixed investment, buoyed by laxer financing conditions, outweighs softer momentum in exports,” EIU economists state.
Lower borrowing costs have encouraged businesses to restart or expand projects delayed by the economic shocks of 2024, while households are gradually regaining confidence as inflation stabilises within the target band.Yet the easing is not without challenges.
A TransUnion Kenya survey conducted in August 2025 shows that despite falling rates, 68 percent of potential borrowers still avoid formal credit due to affordability concerns.High legacy debts, tighter collateral requirements, and cautious banking practices continue to constrain lending, particularly for small businesses.
The CBK has acknowledged these challenges, indicating there remains “scope for further easing” to support private-sector activity if inflation remains subdued.For Kenya to achieve the projected 5 percent growth in 2026, economists agree that several pillars must align: sustained credit growth, macroeconomic stability, stronger export performance, and disciplined fiscal management.
Should global capital conditions tighten, the shilling come under pressure, or public debt risks rise, the recovery could stall. For now, however, Kenya appears positioned for a modest improvement, with the key test being whether monetary gains translate into job creation, stronger consumption, and durable private-sector confidence.
The World Bank has also adjusted its 2025 growth projection for Kenya from 4.5 percent to 4.9 percent, citing a rebound in construction, a sector affected by disruptions during the 2024 protests.According to the Bank, construction activity in the first half of 2025 helped offset weaker performance in manufacturing, providing fresh impetus to the wider economy.
The contrast with 2024 is notable: in the first quarter of that year, construction grew by just 0.1 percent, down from 3.0 percent in 2023, amid declines in cement consumption and bitumen imports, key sector indicators.
President William Ruto’s administration has maintained that the economy is growing between 5 and 5.8 percent, a projection supported by Treasury Cabinet Secretary John Mbadi, who links the momentum to ongoing fiscal consolidation.
During his State of the Nation Address in November, President Ruto cited projections from “14 of the world’s leading financial institutions, including Citigroup, J.P. Morgan, Standard Chartered, and Goldman Sachs,” all anticipating growth within the 5–5.8 percent band in 2026.
According to the President, this trajectory is supported by stable inflation, lower credit costs, improving export receipts, and a broadly stable macroeconomic environment.
