The World Bank has upgraded its economic growth projection for Kenya in 2026, citing stronger-than-expected performance during the first half of the year, even as it warned of mounting risks ahead of the 2027 General Election.
In its latest Kenya Economic Update released on Wednesday, November 4, 2026, the lender raised its forecast for the country’s Gross Domestic Product (GDP) growth to 4.6 per cent, up from the 4.3 per cent projection made in July.
The revised outlook follows improved performance in key sectors, particularly manufacturing and construction, which helped offset weaker agricultural growth.
According to the report, agriculture expanded by 4.2 per cent in the first half of 2026, compared to 4.7 per cent during a similar period in 2025. The slowdown was attributed to below-average short rains that affected crop production.
“Agricultural growth slowed to 4.2 per cent in H1 2026 from 4.7 per cent in H1 2025 (year-on-year), reflecting below-average short rains that weighed on crop production,” read the report in part.
Industrial activity, however, recorded faster growth, supported by stronger construction and manufacturing output.
“By contrast, industrial growth accelerated to 4.9 per cent from 4.3 per cent, supported by stronger construction activity (+6.3 per cent from +5.9 per cent), particularly in cement and galvanised sheet industries and improved manufacturing performance (+3.3 per cent from +2.1 per cent), driven by food and beverages production and vehicle assembly,” the report read.
The World Bank’s July 2026 update had lowered its growth projection to 4.3 per cent, citing global economic uncertainty, higher energy prices and pressure on household purchasing power. The latest revision therefore marks an improvement in the lender’s assessment of Kenya’s near-term economic performance.
Despite the improved forecast for 2026, the World Bank expects Kenya’s economic growth to moderate to 4.4 per cent in 2027 before accelerating to 4.8 per cent in 2028.
The projected slowdown comes as Kenya prepares for the August 2027 General Election, with the lender warning that political uncertainty could affect investment decisions, tourism, trade and overall business activity.
The report cautions that disruptions during the election period could undermine investor confidence and delay the implementation of private sector projects.
“Election-related uncertainty, including the risk of violence and post-election disruptions, could weaken investor confidence, delay private investment decisions, reduce private and foreign investment inflows, disrupt tourism and trade, and weigh on economic growth,” read the report in part.
“Prolonged political contestation could slow progress in addressing Kenya’s underlying structural challenges.”
The warning comes as the country approaches another election cycle, with the World Bank previously identifying political uncertainty and increased public spending pressures as potential obstacles to economic reforms and fiscal discipline.
The lender also identified potential El Niño conditions as another risk to Kenya’s economic outlook, particularly because of the country’s dependence on agriculture and the vulnerability of infrastructure to extreme weather.
It warned that irregular rainfall could reduce agricultural output, damage roads and other infrastructure, and trigger fluctuations in food prices.
Excessive rainfall could also cause flooding, disrupting transport networks and the movement of food supplies across the country. Such disruptions could increase the cost of essential commodities while reducing earnings for households that depend on farming and related activities.
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The World Bank urged the government and county administrations to strengthen preparedness measures rather than rely solely on emergency responses after disasters occur.
“The policy and institutional focus should be on sustained preparedness and longer-term resilience. Immediate priorities include maintaining early warning communication; continually clearing urban drainage; inspecting vulnerable roads and bridges; protecting critical power, water, and health infrastructure; and pre-positioning agricultural and veterinary support in high-risk regions.
“Emergency financing, county response systems, and shock-responsive social protection can be readied for rapid activation,” the World Bank advised.
Beyond the growth outlook, the World Bank raised concerns over Kenya’s public debt burden and the growing reliance on domestic borrowing to finance government operations.
The report put public debt at 69.9 per cent of GDP as of June 2026, highlighting the pressure the country’s borrowing obligations continue to place on public finances.
Kenya’s outstanding debt stood at KSh13.01 trillion at the end of June 2026, with domestic borrowing accounting for 56.2 per cent of the total, according to the figures cited in the report.
The growing dependence on domestic borrowing has also raised concerns about the availability of credit for private businesses, as the government competes with companies for funds from local financial institutions.
The World Bank further noted that interest payments amounted to 5.8 per cent of GDP, leaving the government with fewer resources for development projects and essential public services.
Kenya remains at high risk of debt distress, with the lender warning that the cost of servicing public debt continues to constrain the country’s fiscal space.
To address the debt challenge, the World Bank called on the government to strengthen fiscal discipline, improve the accuracy of budget projections and reduce reliance on supplementary budgets.
It also recommended tighter expenditure controls, prioritising projects with higher economic returns and improving public debt management, including oversight of potential financial obligations that could arise from government guarantees and other commitments.
The lender warned that fiscal adjustments should not undermine essential spending or weaken the country’s growth prospects.
“Fiscal adjustment needs to be credible and growth-friendly, protecting priority spending while improving the efficiency and transparency of public expenditure. At the same time, reducing the costs and uncertainty facing firms will require lower infrastructure and logistics costs, more predictable and transparent administration, and improved access to finance,” the report added.
“Across these priorities, stronger governance and accountability are critical to successful implementation, particularly in revenue administration, procurement and public investment, and at key interfaces between government and businesses.”
The report’s governance concerns were also underscored by the lender’s warning that corruption and collusion cost Kenya an estimated 2 per cent of GDP annually through higher fiscal deficits, increasing the government’s borrowing needs and costs.
