By Benadeta Mwaura - Reporter
Kenya, Jue 11, 2026 - The government has lowered Kenya’s economic growth forecast for 2026 to 5%, citing rising global uncertainties, weaker external demand, climate-related risks and growing geopolitical tensions that continue to weigh on economic activity.
Treasury Cabinet Secretary John Mbadi announced the revised projection while outlining the country's fiscal outlook, marking a downward adjustment from earlier expectations as policymakers confront a more challenging global environment.
According to Mbadi, the revision reflects emerging risks both domestically and internationally, even as Kenya's economy remains among the stronger performers in the region.
"The economy is projected to grow by 5.0% in 2026, supported by continued resilience in agriculture, services and ongoing government interventions under the Bottom-Up Economic Transformation Agenda," Mbadi said.
The revised forecast comes at a time when governments worldwide are reassessing growth expectations amid persistent geopolitical tensions, elevated energy prices and uncertainty in global trade and financial markets.
Treasury noted that while Kenya's economy continues to demonstrate resilience, the external environment has become increasingly unpredictable.
The ongoing conflict in the Middle East has pushed up global oil prices, raising concerns over imported inflation and production costs for oil-importing countries such as Kenya.
The lower growth projection was unveiled alongside the government's KSh4.82 trillion budget for the 2026/27 financial year, which seeks to balance economic expansion with fiscal consolidation and debt management.
Mbadi maintained that despite the downgrade, Kenya remains on a positive growth trajectory compared to many economies facing slower expansion.
"Our economy remains resilient despite global headwinds and domestic challenges," he said.
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Treasury expects agriculture to remain a key driver of growth, supported by favorable weather conditions and continued investment in food production. The services sector, including financial services, information technology and tourism, is also expected to contribute significantly to economic activity.
However, the government acknowledged several risks that could affect performance during the year. These include volatility in international commodity markets, adverse weather conditions, weaker global demand and the potential impact of rising fuel prices on household spending and business operations.
The revised forecast also comes amid growing debate over the Finance Bill 2026 and the broader fiscal strategy being pursued by the government.
Businesses and consumers have been calling for tax relief as they grapple with rising living costs, while Treasury is under pressure to increase revenue collection without introducing measures that could slow economic activity.
Recent data from the Central Bank of Kenya has shown improving macroeconomic stability, with inflation remaining within the government's target range and the Kenyan shilling maintaining relative stability against major international currencies.
Even so, economists caution that external shocks remain one of the biggest threats to growth.
The Treasury's revised forecast aligns with recent assessments by international financial institutions, which have warned that global economic growth is likely to slow as geopolitical conflicts, supply chain disruptions and high borrowing costs continue to affect investment and trade.
As Parliament debates the budget and accompanying Finance Bill proposals, attention will now turn to whether the government's spending plans and economic policies can sustain growth while addressing concerns over public debt, taxation and the rising cost of living.
For households and businesses, the revised 5% growth forecast signals that while Kenya's economy is expected to continue expanding, the road ahead may be more challenging than initially anticipated.