Kenyans could face more difficult economic conditions in the months ahead, with the World Bank warning that as many as 2.4 million additional people may slip into poverty by the end of 2026.
In its latest Kenya Economic Update, the lender cautioned that rising prices of food, fuel and transport threaten to undo recent progress in reducing poverty, particularly in urban centres.
The report attributes the growing inflationary pressure to the conflict in the Middle East, which has disrupted global energy markets and driven up fuel costs.
Released on Thursday, July 9, the report states that higher fuel prices have also increased the cost of transporting goods and services across the country.
According to the World Bank, the conflict could increase Kenya's poverty rate by between 2 and 4.5 percentage points, leaving an extra one million to 2.4 million people below the international poverty line by the close of 2026.
The report also notes that transport inflation remained high, climbing by 10 per cent year-on-year in April 2026 before easing slightly to 9.8 per cent in June.
Food prices continued to strain household budgets, with food inflation standing at 8.8 per cent in April and 8.6 per cent in June.
Speaking during the report's launch, World Bank Lead Economist Tom Bundervoet warned that the continued conflict could have a major impact on poverty levels in Kenya.
"This conflict could push the poverty rate in Kenya by a certain number of percentage points, which then leads to one million or two million more Kenyans below the poverty line in absolute numbers," Bundervoet said.
To help cushion the economy, the World Bank urged the government to accelerate the creation of formal employment, arguing that the labour market is not generating enough quality jobs for the growing workforce.
The institution noted that while roughly 800,000 Kenyans join the labour market annually, only about 100,000 find formal employment, leaving most workers in informal or low-income jobs.
It added that strengthening governance, easing restrictions on private investment and fostering a more business-friendly environment would encourage firms to grow and create more formal employment opportunities.
The World Bank also revised down Kenya's growth outlook, forecasting economic expansion of 4.3 per cent in 2026 and 4.4 per cent in 2027, lower than the projections it issued in November last year.
Besides the Middle East conflict, the lender cited climate-related shocks and increasing political uncertainty ahead of the 2027 General Election as key risks that could further slow Kenya's economic performance.
