The Central Bank of Kenya (CBK) raised its growth forecasts at its Monetary Policy Committee meeting on 8 October 2026. Governor Andrew Kamau announced an expected acceleration to 5.3% in 2027, up from 5.0% estimated for 2026 and 4.6% recorded in 2025. The benchmark rate was held at 8.75%, signalling cautious confidence in the economic trajectory.
A solid Q1 2026
The upward revision is grounded in improving fundamentals. In the first quarter of 2026, the Kenyan economy grew 5.3% year-on-year, compared with 4.9% in Q1 2025. Services — the gateway to digitisation — are projected at 5.6% for 2026 and 5.9% in 2027. Industry, driven by affordable housing and public-private partnerships, is expected at 5.2%, while agriculture is projected at 3.0%.
Private credit rebound and inflation in check
Credit to the private sector rebounded to +10.6% in September 2026, after contracting 2.9% in January 2025. The recovery reflects normalising financial conditions: average lending rates have fallen since the start of the year, and the non-performing loans ratio improved to 13.9% from 17.6% in August 2025.
Inflation stands at 6.8% in September 2026, within the CBK's target band of 2.5 to 7.5%. The rise is driven mainly by processed food products. Foreign exchange reserves stand at $14.7 billion, representing 5.9 months of import cover — a reassuring buffer for the country's external stability.
External risks to watch
The CBK flags several risk factors: the Middle East conflict is weighing on fuel costs and logistics; global trade uncertainty and the war in Ukraine are dampening expectations; and a potential El Niño episode could disrupt agriculture. Global inflation has been revised upwards to 4.7% in 2026. The current account deficit is also expected to widen to 3.2% of GDP in 2026, due to higher oil imports.
Why it matters
Kenya is one of East Africa's economic engines, and its growth forecasts directly influence investment decisions across the region. An acceleration to 5.3% in 2027, driven by digital services and more accommodative credit conditions, sends a positive signal to institutional investors and Indian Ocean partners.
Source: CBK Monetary Policy Committee — statement of 8 October 2026 / People Daily Kenya