Economy rebounds to grow at 5.3 per cent in first quarter

Kenya’s economy records stronger growth as key sectors rebound in the first quarter. [iStockphoto]

Kenya’s economy grew by 5.3 per cent over the first three months of this year, with all key sectors registering positive growth.

This is as the economy attempted to shake off the challenges experienced last year, which included weather shocks. Growth over the first quarter was compared to a growth of 4.9 per cent that the economy that was seen in the first quarter of 2025.

And while the growth for the first quarter of this year is higher than projections for the year, in which the government and analysts project a growth of between 4.3 per cent and 4.9 per cent, the war in the Middle East that started late February and whose impact was seen is a significantly higher cost of fuel in the country starting April might slow down the growth in subsequent quarters.

Among the sectors that supported the economy over the first quarter of this year were accommodation and food service activities, which grew by 14.7 per cent, compared to a growth of eight per cent in quarter one of 2025.

Construction also expanded by a significant margin of 6.6 per cent, up from 4.5 per cent.

“In the first quarter of 2026, the economy recorded an improved performance compared to the corresponding quarter of 2026. Real GDP grew by 5.3 per cent in the first quarter of 2026 compared to a growth of 4.9 per cent in the corresponding quarter of 2025,” said the Kenya National Bureau of Statistics (KNBS) in its quarterly gross domestic product (GDP) report.

"All the sectors of the economy recorded positive growth in the quarter under review, though at varying rates."

“Notably, the manufacturing sector’s growth accelerated to 4.4 per cent in the first quarter of 2026 compared to 2.8 per cent growth in the same quarter of 2025. Other sectors that recorded notable growth included accommodation and food service (14.7 per cent), mining and quarrying (9.1 per cent), construction (6.6 per cent), financial and insurance (6.3 per cent), and information and communication ( five per cent). The agriculture, forestry and fishing sector expanded by 4.9 per cent.”

KNBS noted that the agriculture sector registered a 4.9 per cent growth, a slower growth rate compared to 5.3 per cent in the first quarter of 2025, which was despite improvements in key indicators such as tea production, cane deliveries and milk deliveries to processors that recorded notable growth.

The sector, which is a key contributor to the economy and accounts for a quarter of Kenya’s GDP, was, however, dragged by a decline in coffee production and lower fruit exports.

Manufacturing grew 4.4 per cent in the first quarter of 2026 against a growth of 2.8 per cent over a similar period in 2025.

The financial and insurance services sector grew 6.3 per cent over the quarter to 5.3 per cent in 2026, supported by a reduction in the cost of credit following Central Bank’s reduction in the benchmark Central Bank Rate (CBR) that had come down to 8.75 per cent in March this year from 10.75 per cent in March last year that led to a decline in lending rates by commercial banks.

“The cost of credit declined during the first quarter of 2026, with the average interest rates on loans and other advances by commercial banks declining to 14.7 per cent in March 2026 from 15.77 per cent in March 2025,” said KNBS.