The World Bank has revised its estimate for Kenya's 2026 real GDP growth to 4.6%, up from the 4.4% forecast issued in April. This upward revision is attributed to a 5.3% year-on-year expansion in the first quarter of 2026, the fastest pace since late 2023. The growth was driven by various sectors, including tourism, construction, and manufacturing. According to the World Bank, Kenya's economy is showing signs of improvement.
Tourism played a significant role in Kenya's economic rebound, with accommodation and food services posting a 14.7% surge as international arrivals rose. The sector's growth was a major contributor to the country's overall performance. Additionally, construction activity accelerated to 6.6% growth, buoyed by higher cement consumption and expanded credit facilities. This growth in construction is a positive indicator for the economy.
The manufacturing sector also recorded a 4.4% increase, driven by stronger output of cement, assembled vehicles, and other industrial goods. Furthermore, agriculture, the economy's largest sector, grew 4.9%, supported by higher tea production, sugarcane deliveries, and milk output. The growth in these sectors is a welcome relief for Kenya's economy.
Despite the overall momentum, the Stanbic Bank Purchasing Managers' Index slipped to 49.7 in August, signalling a contraction in private-sector activity. The World Bank noted that persistent supply constraints, elevated input costs, and tight cash flows continue to limit firms' ability to translate demand into output. However, new orders rose for a third month, employment kept expanding, and business confidence reached its highest level in three and a half years.
The World Bank's upward revision of Kenya's growth forecast is not an isolated incident. Regionally, the Bank lifted its 2026 growth projection for Sub-Saharan Africa to 4.3%, attributing the improvement to resilient domestic demand and increased investment in clean energy and digital technologies. This growth is expected to have a positive impact on the region.
The World Bank's forecast upgrade is based on the country's strong Q1 performance. The Bank's projection takes into account various factors, including the growth in tourism, construction, and manufacturing. The upgrade is a positive indicator for Kenya's economy, which has faced several challenges in recent years.
The World Bank's report highlights the need for continued growth and investment in Kenya's economy. The country's growth prospects are expected to improve, driven by various sectors, including tourism, construction, and manufacturing. However, the report also notes that challenges persist, including supply constraints and elevated input costs.
Key points
- World Bank raises Kenya's 2026 GDP growth forecast to 4.6%
- Kenya's Q1 2026 growth driven by tourism, construction, and manufacturing
- World Bank lifts 2026 growth projection for Sub-Saharan Africa to 4.3%
