East Africa: News - Ethiopia, Kenya Expected to Drive East Africa's Growth in 2026: UN

10 January 2026
Addis Standard (Addis Ababa)

Addis Abeba — Ethiopia and Kenya are projected to be the main drivers of East Africa's economic expansion in 2026, as the sub-region is expected to post the fastest growth rate on the continent, according to the United Nations' World Economic Situation and Prospects 2026 report.

The UN forecasts East Africa's economy to grow by 5.8 percent in 2026, up from 5.4 percent in 2025, outperforming all other African sub-regions. This performance is largely attributed to the economic outlook of Ethiopia and Kenya, supported by regional integration efforts and the expansion of renewable energy, the report said.

Reporting on the UN findings, Nairobi based daily newspaper The Star said Africa's overall economic growth is projected to rise to four percent in 2026 and 4.1 percent in 2027, compared to 3.5 percent in 2024 and 3.9 percent in 2025, reflecting improving macroeconomic stability in several major economies, including those in East Africa.

However, the UN cautioned that persistent structural challenges continue to threaten inclusive and sustainable growth. High debt-servicing costs, limited fiscal space, and food inflation remain key constraints across the continent, including in Ethiopia and Kenya.

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The report estimates that Africa's average public debt-to-GDP ratio reached 63 percent in 2025, with interest payments absorbing nearly 15 percent of public revenues. While some countries have regained access to international capital markets through new bond issuances, around 40 percent of African countries remain over-indebted or at high risk, with several seeking debt restructuring under the G20 Common Framework.

Despite these pressures, African growth is expected to remain resilient amid declining official development assistance, rising trade barriers, and global economic uncertainty. According to the UN, Africa's exposure to global trade tensions is relatively limited due to diversified export partners and exemptions from higher US tariffs on key commodities such as crude oil and gold.

Nevertheless, the report highlights risks linked to the potential expiry of the African Growth and Opportunity Act (AGOA) and the introduction of new tariff measures, which could affect exporters in sectors such as clothing--an area of relevance for both Ethiopia and Kenya. Progress in implementing the African Continental Free Trade Area (AfCFTA) has also been described as slow and uneven.

Globally, economic growth is projected to slow slightly to 2.7 percent in 2026, down from 2.8 percent in 2025, and well below the pre-pandemic average of 3.2 percent. Against this backdrop, the UN called for stronger global coordination, renewed commitment to multilateral trade rules, and collective action to address trade realignments, climate shocks, and persistent price pressures.

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