Kenya’s economy is projected to regain momentum and grow by 5.1 per cent in 2027, with the National Treasury expecting easing external pressures and normalisation of global supply chains to support the recovery.

🇰🇪 Breaking It Down

The forecast comes after the National Treasury initially revised Kenya’s 2026 economic growth projection downwards to 5.0 per cent from 5.3 per cent, citing the impact of the ongoing Middle East conflict on domestic economic activity.

Treasury, however, expects the effects of the conflict to ease in 2027, although higher international oil prices could continue to raise fuel and transport costs and put pressure on inflation and the country’s import bill.

The shilling is expected to remain relatively stable, supported by strong remittance inflows, portfolio investments and foreign direct investment.

📌 What You Need to Know

However, prolonged geopolitical tensions and tighter global financial conditions could create pressure on the exchange rate, the Treasury has warned in the 2026 Budget Review and Outlook Paper (BROP) published on Tuesday, August 11.

The current account deficit is projected to improve from 3.0 per cent of GDP in 2026 to 2.8 per cent in 2027, with agriculture, tourism and manufactured goods expected to support export earnings while remittances continue to provide an important source of foreign exchange.

“Growth is projected at 5.0 per cent in 2026 and 5.1 per cent in 2027, supported by resilient domestic demand, improving credit conditions, strong services activity and continued investment,” Treasury said.

The government expects lower borrowing costs to support private-sector credit, household consumption and investment, while moderating inflation and easing production costs could further improve investor confidence.

At the same time, the government says Public-Private Partnerships (PPPs) will remain a major part of the government’s investment strategy, with Treasury expecting private capital to finance major infrastructure projects while reducing pressure on public finances .

Additionally, the industrial sector is also expected to remain robust, supported by the Affordable Housing Programme, ongoing infrastructure projects including the Rironi-Mau Summit Road expansion, settlement of verified pending bills and increased PPP investment.

📰 Source: Kenyans.co.ke