NAIROBI, Kenya, Feb 9 – The Kenyan economy is projected to grow by 5.3 percent in 2026, up from 4.9 percent last year, according to the Diamond Trust Bank (DTB) Economic Outlook for 2026.
DTB said the growth will be supported by low inflation, easing financial conditions, recovering domestic demand, targeted government spending and overall macroeconomic stability.
Some of the key government projects expected to support economic activity include the Affordable Housing programme, expansion of the Rironi–Gilgil–Mau Summit Road, and construction of stadiums ahead of the Africa Cup of Nations in 2027.
While the recovery is expected across most sectors, DTB’s Head of Research Faith Atiti said the pace of growth will vary.
“Accelerated economic growth, well-managed inflation, strengthening labour markets and the accommodative stance of the central bank are expected to support a gradual improvement in household incomes and spending,” DTB said in the outlook.
The report also projects that the Central Bank of Kenya (CBK) could lower interest rates, potentially boosting private sector credit.
However, DTB cautioned that the direction of interest rates will largely depend on the government’s appetite for domestic borrowing.
“Across the region, we expect policymakers to maintain measures aimed at supporting recovery, lowering the cost of living and driving sustainable growth. However, increased reliance on domestic deficit financing could redirect liquidity to the sovereign, crowding out private sector development,” the bank said.
Regionally, DTB expects Uganda and Tanzania to record faster economic growth than Kenya in 2026. The outlook flags key risks for East Africa, including reduced foreign aid, fiscal pressures, external volatility and emerging socio-political risks.
Uganda and Tanzania are expected to stabilise following general elections held in October 2025 and January 2026 respectively, while political activity in Kenya is beginning to pick up ahead of the 2027 General Election.
