NAIROBI, Kenya, July 10 – The World Bank has warned that rising global oil prices triggered by the conflict in the Middle East could push between one million and 2.4 million more Kenyans below the international poverty line this year as higher fuel costs ripple through the economy.
In its latest Kenya Economic Update, the lender said higher fuel prices are increasing transport and food costs, eroding household purchasing power and raising operating expenses for businesses, threatening recent gains in economic recovery.
It also revised Kenya’s 2026 economic growth forecast down to 4.3 percent from an earlier projection, citing weaker private investment, rising production costs and softer consumer spending.
The report further shows that while employment grew by 4 percent in 2025, informal jobs continued to dominate the labour market, accounting for 83.8 percent of total employment.
Although businesses created 54,500 new formal jobs during the year, mainly in manufacturing, financial services and electricity, the World Bank said the gains remain insufficient to significantly improve incomes or productivity.
It noted that Kenya’s economy expanded by 4.6 percent in 2025, slightly lower than the 4.7 percent recorded a year earlier.
Despite the weaker outlook, the lender said Kenya’s macroeconomic fundamentals remain resilient, supported by stable inflation, a relatively stable shilling and stronger private sector lending following successive interest rate cuts.
However, it urged the government to accelerate fiscal reforms, improve public spending efficiency and implement policies that encourage private sector investment and create more productive formal jobs to support inclusive long-term growth.
