NAIROBI, July 10 – The World Bank has lowered its forecast for Kenya’s economic growth, saying the economy is now expected to expand by 4.3% in 2026 and 4.4% in 2027.
The latest projection is 0.6 percentage points below the bank’s November forecast, with higher global energy prices and uncertainty linked to the U.S.-Israeli war on Iran expected to weigh on economic activity. Kenya’s economy grew 4.6% in 2024, while the government is projecting growth of 5.0% this year and 5.2% in 2027.
According to the World Bank, rising fuel costs and higher prices for imported goods are expected to increase production costs, slow private investment and reduce household purchasing power as commodity prices rise and remittance inflows ease.
Even so, the bank said good agricultural harvests, lower interest rates, a stable exchange rate and a recovery in private sector lending should help support growth.
The report also warned that the impact of the Middle East conflict could push Kenya’s poverty rate up by between 2 and 4.5 percentage points, leaving an additional one million to 2.4 million people living below the $3-a-day poverty line.
Beyond external pressures, the World Bank said climate-related shocks and political uncertainty ahead of Kenya’s general elections in August 2027 remain key risks. It noted that election-related uncertainty could slow private investment, delay economic reforms and increase pressure on public spending.
Last month, the World Bank approved a $750 million budget support loan for Kenya, alongside a $500 million sustainability-linked financing facility aimed at reducing the country’s reliance on costly domestic borrowing and supporting ongoing economic reforms.
