Diamond Trust Bank (DTB) expects Kenya’s economy to grow by 5.3 percent in 2026, up from 4.9 percent in 2025, according to its 2026 Economic Outlook.
The bank says this growth will be supported by low inflation, easier financial conditions, improving local demand, focused government spending and a stable economic environment.
Major government projects such as the Affordable Housing programme, the expansion of the Rironi–Gilgil–Mau Summit Road, and the construction of stadiums ahead of the 2027 Africa Cup of Nations are expected to boost economic activity.
Although most sectors are likely to recover, DTB’s Head of Research, Faith Atiti, noted that growth will not be uniform across all industries.
DTB said that faster economic growth, controlled inflation, stronger job markets and the central bank’s supportive policies should gradually improve household incomes and spending.
Also Read: East Africa’s Economic Outlook 2026: Growth Ahead, but Risks Loom Large
The report also indicates that the Central Bank of Kenya (CBK) may cut interest rates, which could encourage more lending to the private sector.
However, DTB warned that interest rate decisions will depend largely on how much the government borrows locally.
The bank added that while policymakers across the region are expected to continue supporting economic recovery and lowering the cost of living, heavy domestic borrowing by governments could reduce funds available to the private sector.
In the region, DTB projects that Uganda and Tanzania will grow faster than Kenya in 2026. The report highlights risks to East Africa’s outlook, including reduced foreign aid, fiscal pressure, global economic uncertainty and rising socio-political tensions.
Uganda and Tanzania are expected to stabilise after their recent general elections, while political activity in Kenya is already increasing ahead of the 2027 General Election.
