NAIROBI — The World Bank has warned that escalating geopolitical tensions in the Middle East and…
NAIROBI — The World Bank has warned that escalating geopolitical tensions in the Middle East and their impact on global energy markets could reverse years of poverty reduction in Kenya, with between one million and 2.4 million additional people at risk of falling below the international poverty line by the end of 2026.
In its latest assessment of Kenya’s economy, the Washington-based lender said surging fuel prices driven by disruptions linked to the ongoing regional conflict are expected to ripple across the economy, raising transport costs, food prices and the overall cost of living for households already struggling with high inflation.
The World Bank estimates that Kenya’s poverty rate could rise by two to 4.5 percentage points this year if higher fuel costs continue to filter through the broader economy. The institution’s microsimulation analysis suggests the economic shock would disproportionately affect urban households, where families spend a larger share of their incomes on transport, rent and purchased food.
The warning comes despite Kenya having recorded gradual improvements in poverty reduction in recent years. According to the World Bank, the national poverty rate had been projected to decline from 39.8 percent in 2022 to 37.5 percent in 2025. However, the latest energy-driven inflationary pressures threaten to erase much of that progress, potentially pushing the poverty rate back to between 39.5 percent and 42 percent during 2026.
The report highlights fuel prices as the primary transmission channel through which external conflicts are affecting Kenya’s economy. Rising petroleum costs have increased transportation expenses, forcing businesses to pass higher operating costs on to consumers. As supply chains become more expensive, prices for essential goods including food and household necessities have continued to climb.
Beyond the immediate inflationary pressures, the World Bank also downgraded Kenya’s economic growth forecast to 4.3 percent in 2026, citing the lingering effects of higher global energy prices, climate-related risks and political uncertainty ahead of the country’s next electoral cycle.
The findings underscore Kenya’s vulnerability to external economic shocks despite recent macroeconomic reforms. As one of East Africa’s largest economies and a net importer of petroleum products, Kenya remains highly exposed to volatility in international oil markets, making global conflicts far beyond its borders a direct threat to household incomes and economic stability.
