The Central Bank of Kenya (CBK) has raised its economic growth forecast for 2026 to 5 per cent from the previous projection of 4.9 per cent, citing stronger performance in the industry and services sectors.
The revised outlook, announced following the Monetary Policy Committee meeting on October 7, represents an improvement from the 4.6 per cent economic growth recorded in 2025.
The central bank also maintained its economic growth projection for 2027 at 5.3 per cent, reflecting continued optimism about Kenya’s economic prospects.
According to the CBK, the improved outlook is supported by increased government infrastructure spending, digital innovation, improved access to private-sector credit and relative macroeconomic stability.
The services sector is projected to expand by 5.6 per cent in 2026, while industry is expected to grow by 5.2 per cent. Agriculture is projected to expand by 3 per cent.
CBK Maintains Interest Rates at 8.75%
Alongside the revised growth forecast, the Monetary Policy Committee retained the Central Bank Rate at 8.75 per cent, maintaining its position for the fourth consecutive meeting.
The committee said the current monetary policy stance remained appropriate for containing inflation expectations and supporting exchange-rate stability.
However, inflationary pressures remain a concern. Kenya’s annual inflation rate increased to 6.8 per cent in September from 6.6 per cent in August, driven partly by higher prices of processed food products, including milk, wheat products and edible oils.
The central bank warned that elevated global oil prices could increase production, transportation and import costs, potentially putting additional pressure on household budgets and businesses.
Businesses Face External Risks
Despite the improved growth outlook, the CBK cautioned that prolonged geopolitical tensions, uncertainty over international trade policies and the potential effects of an El Niño weather phenomenon could weigh on economic performance.
Higher fuel prices could raise operating costs for manufacturers, transport companies, farmers and small businesses. Meanwhile, adverse weather conditions could disrupt agricultural production, affect food supplies and increase prices.
The central bank said it would continue monitoring global oil prices and their potential effects on inflation.
The revised forecast signals improved expectations for Kenya’s economy, although the extent to which growth translates into more jobs, affordable credit and improved household incomes will depend on actual economic performance in the coming months.
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