Kenya’s Economy Expands 5.3% as Key Sectors Rebound But The Latest Data Reveals a Growing Concern.

Kenya’s economy opened 2026 on a stronger footing, supported by faster growth in tourism, manufacturing and construction, even as rising food prices and a widening current account deficit (the gap between what Kenya earns from abroad and what it spends overseas) clouded the outlook. The economy expanded by 5.3% between January and March, up from 4.9 percent in the same period last year, according to the latest data from the Kenya National Bureau of Statistics (KNBS).

Hotels and restaurants led the growth charge, expanding by 14.7% compared with 8% a year earlier. International arrivals through Jomo Kenyatta and Mombasa international airports increased by 13.1% to 506,622 passengers, providing a boost to tourism related businesses.

Manufacturing grew by 4.4%, accelerating from 2.8% a year earlier, supported by higher production of sugar, soft drinks, assembled vehicles, galvanised sheets and cement. Vehicle assembly rose by 18.1% to 3,983 units, while cement production increased by 17.7% to 2.81 million tonnes.

The construction sector expanded by 6.6%, supported by an almost 18% increase in cement consumption. Mining and quarrying grew by 9.1%, making it the second fastest growing sector after hospitality.

Agriculture expanded by 4.9% supported by increased tea production, sugarcane deliveries and milk supplies, which helped offset declines in coffee production and fruit exports. Lower borrowing costs also offered some relief to businesses, with the average commercial bank lending rate falling to 14.70% in March from 15.77% a year earlier, while private sector credit grew by 8.5% to Sh5.17 trillion over the same period.

Despite the stronger growth, inflation and the current account moved in the wrong direction. Inflation rose to 4.35% from 3.45%, driven mainly by higher food prices while the current account deficit also widened to Sh120.9 billion from Sh70 billion, meaning Kenya paid out more abroad than it earned, a gap that can increase demand for foreign currency and put pressure on the shilling.