Kenya’s current account deficit widened by 59.4 per cent in the 12 months to August 2026, reflecting a deteriorating trade balance as the value of imports rose faster than exports and remittance inflows declined, according to the World Bank’s November 2026 Kenya Economic Update.
The trade deficit expanded by 20.8 per cent over the period, adding pressure to the country’s external position. The widening gap indicates that Kenya spent more on imported goods relative to the earnings generated from exports, while weaker remittance inflows provided less support to foreign exchange receipts.
Remittances declined by 0.9 per cent to US$5.1 billion in the 12 months to August 2026. The slowdown came despite remittances remaining an important source of foreign exchange for the economy, supporting household consumption and helping finance the country’s external payments.
The report also points to stronger capital inflows, offering some support to the balance of payments. Foreign direct investment inflows increased by 170.5 per cent to a record US$2.74 billion in the 12 months to September 2026. Portfolio inflows also rose by 54.6 per cent over the period.
However, stronger investment inflows have not prevented the current account from coming under pressure. The World Bank projects the deficit will increase to 4.3 per cent of gross domestic product in 2026, up from 2.8 per cent in 2025.
The pressure comes as Kenya continues to rely on imports to meet domestic demand for goods and production inputs. When imports grow faster than exports, the resulting trade gap increases the amount of foreign currency needed to settle external transactions.
Kenya’s foreign exchange reserves stood at US$14.7 billion in October 2026, equivalent to 5.9 months of import cover. The shilling remained broadly stable, according to the report, while the reserve position provided a buffer against external financing pressures.
The World Bank’s figures point to a mixed external outlook: rising foreign investment and adequate reserves are supporting the economy, but the widening trade gap and weaker remittances remain concerns.
The projected increase in the current account deficit means Kenya will need to sustain foreign exchange inflows and strengthen export performance to contain external vulnerabilities. The pace at which exports, investment and remittances develop will be important in determining whether the country can narrow the gap in the coming period.
