IMF cuts Kenya’s 2026 growth outlook to 4.5 per cent amid global headwinds

IMF cuts Kenya’s 2026 growth outlook to 4.5 per cent amid global headwinds - An aerial view of Nairobi City. (Photo: Flickr)

Kenya faces risks from the evolving El Niño weather pattern, which could disrupt agricultural production and electricity supply in parts of East Africa.

Kenya’s economic growth is projected to slow to 4.5 per cent in 2026 from 4.6 per cent last year, the International Monetary Fund (IMF) has warned in its October Regional Economic Outlook.

The weaker outlook reflects mounting pressure from global uncertainty, rising import costs and tighter financing conditions, which threaten to weigh on domestic economic activity.

Kenya also faces risks from the evolving El Niño weather pattern, which could disrupt agricultural production and electricity supply in parts of East Africa.

While above-normal rainfall could benefit farming in some areas, flooding could damage crops and infrastructure, raising food prices and import requirements.

Notably, the outlook puts Kenya behind some of its regional peers, which are expected to sustain faster economic expansion despite facing similar external pressures.

Uganda’s economy is projected to grow by 6.5 per cent in 2026, down from 6.7 per cent in 2025, before accelerating sharply to 9.9 per cent in 2027.

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Tanzania’s growth is expected to improve to 6.0 per cent this year from 5.9 per cent in 2025, before easing slightly to 5.9 per cent in 2027.

Rwanda, meanwhile, is projected to record growth of 7.4 per cent in 2026, down from 9.4 per cent last year, followed by a further moderation to 7.2 per cent in 2027.

Across Sub-Saharan Africa, growth is projected to remain steady at 4.5 per cent this year before maintaining the same pace in 2027.

Economic reforms, commodity revenues and businesses adapting to global supply disruptions are helping cushion the region against external shocks, although rising energy and fertiliser costs and declining foreign aid continue to cloud the outlook.

The regional differences underscore the uneven pace of economic expansion, with countries benefiting differently from domestic reforms, investment and commodity market developments.

The lender urges governments to preserve fiscal stability, direct assistance towards vulnerable households and protect productive investment to strengthen resilience against future shocks.