The global economic environment heading into 2026 is expected to remain challenging, shaped by slowing growth, ongoing trade tensions, and policy uncertainty. According to Cytonn’s 2026 Markets Outlook, global economic growth is projected to moderate, reflecting weaker trade activity, rising tariffs, and subdued demand. While inflation is expected to ease compared to 2025, risks remain elevated as higher import and production costs could place renewed pressure on consumer prices.
Emerging Markets and Developing Economies are also projected to experience a slight slowdown, highlighting the continued vulnerability of global growth to external shocks. These conditions reinforce the need for economies to strengthen domestic resilience while managing external risks related to trade, capital flows, and inflationary pressures.
Within Sub-Saharan Africa, the outlook is comparatively more positive. Growth in the region is expected to rebound in 2026, supported by easing inflation, ongoing economic reforms, improved fiscal support, and stronger domestic investment. However, high public debt levels and rising debt servicing costs continue to pose downside risks, particularly as governments rely on borrowing to finance persistent fiscal deficits.
Kenya’s macroeconomic outlook for 2026 remains cautiously optimistic. Economic growth is projected to strengthen, supported by recovery in business activity, improved agricultural performance, and robust growth in the services sector. Tourism, accommodation, food services, and information technology are expected to play a key role in driving this growth. Nonetheless, challenges such as elevated public debt, global economic headwinds, and domestic political uncertainty ahead of the 2027 general elections remain important risks.
Inflation is expected to remain within the government’s target range, although medium- to long-term pressures may emerge due to fuel and electricity costs, currency movements, and the lagged effects of monetary easing. The Kenya Shilling is projected to remain relatively stable, supported by strong foreign exchange reserves, improved remittance inflows, and prudent central bank liquidity management.
In the financial markets, fixed income performance reflects strong investor demand, with Treasury bills continuing to attract high subscription levels. Equities markets have shown positive momentum, driven by gains in select large-cap stocks, while real estate activity has benefited from infrastructure development and a resurgence in tourism-related investments.
Overall investor sentiment for 2026 is expected to remain positive, supported by macroeconomic stability, infrastructure development, and fiscal consolidation efforts. However, political activity and security concerns are likely to introduce periods of uncertainty as the country moves closer to the election cycle.
In such an environment, maintaining financial flexibility and stability is critical. Investors and savers are increasingly seeking instruments that preserve capital, provide predictable returns, and allow access to funds when needed.
As financial markets respond to shifting global conditions and evolving economic dynamics, maintaining a flexible and stable savings strategy is essential. Consider growing your savings with the Cytonn Money Market Fund (CMMF) a transparent, liquid investment option designed to help you earn steady returns while keeping your funds accessible.
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