Global rating agency Fitch has lowered its 2026 growth forecasts for Kenya, the Democratic Republic of Congo (DRC) and Ethiopia, and warned of fragile prospects for Tanzania amid a projected surge in inflation driven by the escalating Middle East crisis.

In its country risk report dated April 1, 2026, the agency cut Kenya’s growth forecast to 5.0 percent from 5.2 percent, DRC’s to 5.2 percent from 5.7 percent, and Ethiopia’s to 8.0 percent from 8.2 percent, noting that inflation will run “a bit hotter” than previously expected.

The revisions reflect the longer-than-expected duration of the Iran conflict, which began on February 28.“While fuel prices have remained stable in Kenya so far – reflecting shipments priced in February – we expect a sharp upward adjustment in mid-April. Consequently, we have raised our average annual inflation forecast to 5.5 percent, up from 4.6 percent pre-conflict,” Fitch said.

The agency also raised inflation forecasts for DRC to 5.0 percent from 4.0 percent, and for Ethiopia to 13.5 percent from 11.2 percent.

“Tanzania’s key tourism industry is also exposed, as a significant portion of tourist arrivals transit through the GCC region,” the agency said.“A prolongation of the war beyond Fitch’s current assumption of one month could translate into a significant shock to inflation, external reserves and economic growth.”Fitch expects Tanzania’s current account deficit to widen to 3.5 percent of GDP in 2026, driven by higher fuel import costs and weaker tourism.

Travel exports amounted to $4.4 billion in 2025, or 25 percent of total exports of goods and services. This will be partly offset by rising gold exports, which stood at $4.7 billion (27 percent of total exports), Fitch said.

"Tanzania’s growth will be above our projected 4.5 percent for the ‘B’ median over the same period. Tanzania’s low growth volatility may understate macroeconomic stability risks, given the vulnerability of the agricultural sector to rainfall patterns and natural disasters,” it said.

Kenya pressureThe US-Israel war on Iran is already sending shockwaves through the global economy, driving up energy costs, disrupting shipping routes and threatening global growth.“Kenya stands out as one of the Sub-Saharan African economies most exposed to the Middle East conflict, prompting us to revise down 2026 real GDP growth to five percent from 5.2 percent pre-conflict,” Fitch said.

However, Fitch said rising prices of goods and services are likely to weigh on consumers already strained by the cost of living, potentially heightening social tensions.“Higher cost of living would prompt a sharp rise in public dissatisfaction. An uptick in protests is likely if fuel prices rise,” it said.

Kenya’s inflation for March increased to 4.4 percent, reversing the slight easing recorded in February and signalling renewed pressure on household budgets.

Annual inflation ticked up from 4.3 percent in February, driven largely by increases in food prices, which remain the most volatile and influential component of the consumer basket, according to the Kenya National Bureau of Statistics.

Wider shockThe ongoing Middle East war began on February 28, when the US and Israel launched airstrikes on multiple sites in Iran, killing Supreme Leader Ali Khamenei and other officials.

Iran responded with missile and drone strikes against Israel, US bases and allied targets in the region.

The escalation has led to the closure of the Strait of Hormuz, a key chokepoint handling 20 percent of global oil supply and 30 percent of maritime trade.

Fitch said a prolonged conflict, coupled with higher oil prices, has weakened the outlook for Sub-Saharan Africa, prompting it to trim its 2026 regional growth forecast to 4.2 percent from 4.3 percent.

“The longer the conflict lasts, and the more severe the disruption to shipping routes and energy and fertiliser supplies, the greater the risk of a significant growth slowdown across the continent,” it said.“More broadly, the conflict, which has already triggered a trade shock, could quickly turn into a cost-of-living crisis across Africa through higher fuel and food prices, rising shipping and insurance costs, exchange rate pressures, and tighter fiscal conditions.”

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