Economy of Kenya - an outlook

Kenya's economy is among the largest and most dynamic in sub-Saharan Africa and is a regional hub for trade, finance, and innovation. According to the latest outlook from the Mastercard Economics Institute, Kenya's economy is expected to remain robust in 2026. This is supported by strengthened trade relations with emerging markets and increasing digitalization. The Mastercard Economics Institute's 2026 economic outlook states that Kenya is well-positioned to continue its positive economic development despite a challenging global environment. The report highlights solid domestic demand, growing digital participation, and diversified trade relationships as key strengths. It's unlikely to be quite that optimistic. Kenya's GDP grew by 5.2% in 2024, a slight increase from 4.9% in 2023. This growth is attributed to a stabilizing economy and looser monetary policy, with the central bank's key interest rate being lowered to 9.75% by mid-2025. Forecasts for 2025 predict growth of around 5%, supported by expansion in the service sector, telecommunications, construction, and small businesses. Agriculture remains the dominant sector, employing 50–60% of the workforce and exporting tea, coffee, flowers, and horticultural products. Services such as IT, tourism, finance, and logistics are growing rapidly, while the manufacturing sector is concentrated on food processing and consumer goods production in metropolitan areas like Nairobi and Mombasa.[1][3] Further challenges to the Mastercard Economics Institute study include high national debt, fiscal pressure resulting from the 2024 protests, and inflation. At the same time, urbanization is boosting industry, and a young, tech-savvy population is fostering the creation of startups. Kenya aims to achieve emerging market status by 2030. Forecasts from major financial institutions (World Bank, IMF) and local analysts paint a picture of "stability rather than acceleration." Real growth of approximately 4.9% to 5.5% is expected. This puts Kenya still above the sub-Saharan African average (around 4.1%). Inflation has stabilized and is projected to remain at approximately 4.5% to 5.2% in 2026. It thus remains within the central bank's target range, even though slightly rising energy prices and tax adjustments are preventing a further decline. The Kenyan shilling (KES) has stabilized against the US dollar and is expected to trade in a range of approximately 129 to 132 KES/USD by the end of 2026. Kenya set for steady growth amid global uncertainty - Report, citicen.digital