Ethiopia, Kenya to Drive Africa’s Economic Growth in 2026, UN Projects

Addis Ababa, January 11, 2026 (ENA) —Ethiopia and Kenya are set to spearhead Africa’s economic expansion in 2026, with East Africa projected to record the fastest growth on the continent, according to the United Nations’ World Economic Situation and Prospects 2026 report.

The UN forecasts Africa’s overall economic growth to rise to 4.0 percent in 2026 and 4.1 percent in 2027, up from 3.5 percent in 2024 and 3.9 per cent in 2025.

 The improved outlook is largely attributed to stronger performances in Ethiopia and Kenya, underpinned by regional integration initiatives and the expansion of renewable energy.

East Africa is expected to grow by 5.8 percent in 2026, up from 5.4 percent in 2025, maintaining its position as the continent’s fastest-growing sub-region.

 The report cites improved macroeconomic stability in several major economies as a key factor behind the acceleration.

Despite the positive outlook, the UN warns that high debt-servicing costs, limited fiscal space and persistent food inflation continue to undermine prospects for inclusive and sustainable development.

 It also highlights risks stemming from global trade tensions, uncertainty surrounding the African Growth and Opportunity Act (AGOA), and slow implementation of the African Continental Free Trade Area (AfCFTA).

Growth across Africa’s other sub-regions is expected to be mixed.

North Africa is projected to slow slightly to 4.1 per cent in 2026, from 4.3 per cent in 2025, while West Africa is forecast to ease to 4.4 per cent, down from 4.6 per cent.

Central Africa is expected to expand by 3.0 per cent, up from 2.8 per cent, while Southern Africa is projected to grow by 2.0 per cent, compared with 1.6 per cent in 2025.

The report estimates that Africa’s average public debt-to-GDP ratio will reach 63 per cent in 2025, with interest payments consuming nearly 15 per cent of public revenue.

While a few countries have regained access to international capital markets through new bond issuances, about 40 per cent of African nations remain over-indebted or at high risk, prompting several to seek debt restructuring under the G20 Common Framework.

Although African trade expanded in 2025—driven by strong exports of precious metals and agricultural products, alongside higher imports of transport equipment—the UN notes ongoing vulnerabilities.

The region’s exposure to global trade tensions has been partly cushioned by diversified export partners and exemptions from higher US tariffs on key commodities such as crude oil and gold.

However, the possible expiry of AGOA and the introduction of new tariff measures pose risks, particularly for clothing exporters.

Progress on AfCFTA implementation remains slow and uneven, limiting its potential to boost intra-African trade.

Globally, the UN projects economic growth of 2.7 per cent in 2026, slightly below the 2.8 per cent estimated for 2025 and well under the pre-pandemic average of 3.2 per cent.

To navigate ongoing trade realignments, inflationary pressures and climate-related shocks, the UN calls for stronger global coordination and renewed commitment to an open, rules-based multilateral trading system amid rising geopolitical tensions and weakening multilateral cooperation.