Kenya’s economy experienced an impressive growth of 5.3% in the first quarter of 2026, up from 4.9% during the same period in 2025, as reported by the Kenya National Bureau of Statistics (KNBS) in their latest Quarterly Gross Domestic Product (GDP) Report.
This positive data from KNBS indicates a robust economic recovery, with key sectors such as tourism, construction, manufacturing, financial services, and agriculture driving this growth. The report reveals that every sector of the economy achieved positive growth during the quarter, showcasing Kenya’s resilience in the face of global uncertainties and domestic cost challenges.
According to KNBS, all sectors reported growth, albeit at different rates. The Accommodation and Food Service sector stood out as the fastest-growing major sector, expanding by 14.7%, a significant increase from 8.0% in the first quarter of 2025.
This remarkable performance stemmed from a surge in international tourist arrivals through Jomo Kenyatta International Airport (JKIA) in Nairobi and Moi International Airport in Mombasa. The number of international visitors arriving at these airports rose by 13.1%, totaling 506,622 passengers during the quarter.
This growth underscores the ongoing recovery of Kenya’s tourism industry, a vital source of foreign exchange and employment. Regions dependent on tourism, including Mombasa, Diani, Kilifi, Malindi, Maasai Mara, Amboseli, and Nairobi, experienced increased visitor numbers, driving demand for hotels, restaurants, transport services, and tour operators.
KNBS highlighted that the accommodation and food service sector achieved a noteworthy growth of 14.7% in the first quarter of 2026.
The construction sector also demonstrated strong growth, expanding by 6.6% in the first quarter of 2026, up from 4.5% in the same quarter of 2025. This expansion was evident in heightened consumption of construction materials and increased investment activity. Cement consumption surged by 17.9%, while imports of bitumen, iron, and steel also saw an uptick during this period.
Furthermore, credit extended to the construction sector increased to Ksh200.6 billion from Ksh157.3 billion a year prior, reflecting growing confidence from developers and investors. This strong performance indicates ongoing infrastructure development and real estate activity in Nairobi, Kiambu, Machakos, and other rapidly growing urban centers.
Kenya’s manufacturing sector also reported an improved performance, with growth accelerating to 4.4% from 2.8% in the first quarter of 2025. The KNBS report noted that this growth was driven by increased production across both food and non-food manufacturing industries. Sugar production rose by 4.4%, soft drink production increased by 7.6%, and assembled vehicle production soared by 18.1%. Additionally, cement production expanded by 17.7%, reflecting the rising demand from the construction sector and overall economic activity.
Manufacturing hubs in Nairobi, Mombasa, Nakuru, and Kisumu are poised to benefit from this sector’s recovery, leading to increased production, investment, and job opportunities.
The agriculture, forestry, and fishing sectors expanded by 4.9% during the quarter, benefiting from higher tea production, milk deliveries, and sugarcane deliveries, though lower coffee production and declining fruit exports slightly impacted overall performance.
Meanwhile, the financial and insurance sector grew by 6.3%, fueled by lower borrowing costs that supported business activity. The Central Bank Rate was lowered to 8.75% by March 2026, contributing to a decline in commercial lending rates. This decrease in credit costs is expected to bolster investment by businesses and enhance access to financing for households.
Despite the strong GDP growth in Q1 2026, KNBS reported mixed results among key macroeconomic indicators. Inflation rose to 4.35% from 3.45% a year earlier, primarily due to increasing food prices, while the current account deficit widened from Ksh70 billion to Ksh120.9 billion during this period.
Nonetheless, the broad-based growth across all sectors indicates that Kenya remains on a solid economic path. With tourism flourishing, construction activity gaining momentum, and manufacturing rebounding, the latest KNBS report reinforces the expectation that Kenya will continue to be one of East Africa’s fastest-growing economies in 2026.
For businesses, investors, and households, these encouraging GDP figures signal a continued recovery and expansion of economic activity throughout the country.
