Outlook for 2026: A more upbeat growth path
Kenya’s economy is expected to accelerate in 2026, supported by falling borrowing costs, stronger export performance, and healthier household spending. A consensus among global banks, consultancies, and think tanks points to a brighter macro backdrop as policymakers work to ease financing conditions, improve infrastructure, and stimulate demand within the domestic market.
Analysts highlight that lower credit costs can spur investment and consumer spending, two crucial engines for Kenya’s growth. With appetite for capital returning and financial conditions easing, businesses are more likely to expand capacity, create jobs, and raise productivity—key ingredients for a broader and more durable expansion next year.
Key drivers shaping the 2026 trajectory
Declining borrowing costs
The decline in loan rates and easier access to credit are cited as the primary catalysts for the 2026 outlook. Banks’ funding costs have eased in several markets, allowing lenders to pass on savings to borrowers. This should support small and medium-sized enterprises, agriculture, manufacturing, and service sectors that rely on credit to scale operations and weather cyclical demand shifts.
Export performance gains
External demand is a notable upside for Kenya, with improved export performance projected to bolster the current account. A more competitive exchange rate environment, coupled with growing regional and global demand for Kenyan goods, is expected to stabilize external accounts and contribute to GDP growth. Sectors such as agriculture, horticulture, and apparel are poised to benefit from expanding markets abroad.
Household spending and confidence
Rising household income and higher consumer confidence can reinforce the domestic demand impulse. As families experience lower financing costs and improved employment prospects, consumption—particularly in staples and durable goods—should strengthen, supporting retail and service sectors that have struggled to regain pre-pandemic momentum.
Risks and policy considerations
Despite the optimistic tone, the 2026 outlook hinges on several risks. Global financial volatility, shifts in commodity prices, and potential shocks to regional trade can disrupt the expected gains. Domestic policy will matter as well: prudent fiscal management, robust financial sector regulation, and targeted investments in infrastructure and human capital will be crucial to convert lower borrowing costs into sustainable growth.
Policy makers may also focus on enhancing export competitiveness, improving logistics, and expanding access to credit for underserved segments of the economy. A continuing emphasis on job creation, education, and digital adoption can help Kenya translate improved funding conditions into broad-based prosperity.
Implications for investors and the public
For investors, the 2026 outlook suggests a more conducive environment for capital allocation where risk-adjusted returns are favorable. For households and businesses, lower financing costs translate into more affordable credit and potential for higher consumption and investment. The overall message is cautious optimism: with supportive policies and favorable external conditions, Kenya could see a steadier, higher-growth trajectory in 2026.
