By Business Insider Reporter
Ethiopia and Kenya are set to anchor East Africa’s economic expansion in 2026, with the sub-region projected to record the fastest growth rate on the African 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. The stronger outlook is largely underpinned by the economic trajectories of Ethiopia and Kenya, supported by continued regional integration, infrastructure development and the expansion of renewable energy capacity.
Reporting on the UN findings, Nairobi-based daily The Star noted that Africa’s overall economic growth is expected to rise to 4 percent in 2026 and 4.1 percent in 2027, compared with 3.5 percent in 2024 and 3.9 percent in 2025. The acceleration reflects improving macroeconomic stability in several major economies, particularly in East Africa.
Ethiopia’s projected momentum is linked to reforms aimed at stabilising its macroeconomic environment, investment in infrastructure, and growth in agriculture and manufacturing. Kenya, meanwhile, continues to benefit from a diversified economy, strong performance in services, technology, and financial markets, as well as its role as a regional trade and logistics hub.
However, the UN cautions that persistent structural challenges continue to weigh on inclusive and sustainable growth across Africa. High debt-servicing costs, limited fiscal space and food inflation remain significant constraints, including in East Africa’s leading economies.
Africa’s average public debt-to-GDP ratio is estimated to have reached 63 percent in 2025, with interest payments consuming 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 of debt distress, with several pursuing restructuring under the G20 Common Framework.
Despite these headwinds, the UN expects African growth to remain relatively resilient, even as official development assistance declines, global trade barriers rise and economic uncertainty persists. Africa’s exposure to global trade tensions is described as limited, partly due to diversified export markets and exemptions from higher US tariffs on key commodities such as crude oil and gold.
Nonetheless, risks remain. The report highlights concerns around 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 apparel – particularly relevant for Ethiopia and Kenya. Progress on the African Continental Free Trade Area (AfCFTA) is also characterised as slow and uneven. Globally, economic growth is projected to ease 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 calls for stronger global coordination, renewed commitment to multilateral trade rules, and collective action to address trade realignments, climate shocks and persistent price pressures.
