Eastern Africa is expected to remain one of Africa’s fastest-growing regions in 2026, supported by strong domestic demand, infrastructure investment and expanding service sectors. However, high fuel costs, foreign-exchange pressures, debt burdens and climate shocks continue to threaten the outlook.
The World Bank projects that economic growth in Eastern and Southern Africa will rise from 3.7 per cent in 2025 to 4.1 per cent in 2026. Excluding Angola and South Africa, the region is expected to grow by 5.7 per cent, underscoring the stronger performance of economies in East Africa.
The East African Community is projected to remain the fastest-growing bloc in the broader Eastern and Southern Africa region, with growth expected to increase from 5 per cent in 2025 to 6.2 per cent in 2026. Rwanda, Tanzania and Uganda are expected to remain among the region’s leading performers, supported by investment, domestic consumption and service-sector expansion.
Economic activity across Eastern Africa is being driven by construction, financial services, telecommunications, trade, tourism and agriculture. Governments in the region are also investing in transport corridors, digital infrastructure, energy systems and cross-border trade links in an effort to strengthen regional integration and improve competitiveness.
However, external shocks remain a major concern. Most Eastern African countries are net importers of fuel, fertilizers, food products and industrial inputs. Rising global fuel and shipping costs can quickly increase transport expenses, production costs and consumer prices.
The World Bank said the Middle East conflict and disruptions to major shipping routes have placed new pressure on import-dependent African economies. Higher energy prices can widen import bills, reduce foreign-exchange reserves and weaken household purchasing power, especially in countries with limited fiscal space.
Inflation has eased in several regional economies, but it remains vulnerable to renewed currency depreciation, food-price shocks and higher energy costs. Governments face a difficult balance between controlling prices, protecting low-income households and maintaining fiscal discipline.
High public debt and rising debt-service obligations also continue to limit government spending. Countries with large infrastructure needs must manage the challenge of financing roads, energy projects, water systems and social services without increasing debt vulnerabilities.
The report said stronger domestic revenue mobilisation, improved public financial management and deeper local financial markets could help governments reduce reliance on volatile external financing. Expanding access to domestic credit could also help small businesses invest, create jobs and support economic growth.
The region’s large youth population presents both an opportunity and a challenge. While digital services, tourism, manufacturing, agribusiness and logistics can create jobs, economic growth must become more labour-intensive if it is to reduce unemployment and poverty.
Digital transformation is expected to play an increasingly important role, but access remains unequal. Many households, particularly in rural and low-income communities, still lack reliable electricity, affordable devices and access to mobile internet.
The World Bank warns that emerging technologies, including artificial intelligence, could widen inequality if the benefits remain concentrated among formal businesses, skilled workers and wealthier urban households.
For Eastern Africa, the immediate task is to sustain growth while improving resilience. That will require stronger regional trade, more reliable energy supplies, diversified exports, climate-resilient agriculture and policies that translate investment into productive employment.
The region’s growth prospects remain comparatively strong, but lasting progress will depend on whether governments can reduce the cost of doing business, manage external shocks and ensure that economic gains reach households and small enterprises.
