NAIROBI - Kenya's growth rebounded to 7.5% in 2021, data released on Thursday showed, as its finance minister Ukur Yatani forecast the economy would continue on this trajectory this year.

Growth in East Africa's biggest economy slid into its first contraction in nearly three decades in 2020 as the COVID-19 pandemic damaged key sectors such as tourism.

But the Kenyan economy bounced back from the coronavirus crisis last year, buoyed by all its sectors except for agriculture, with growth at its highest since 2010.

The economy is expected to continue on its growth trajectory this year, Yatani said, although it was unlikely to match the 2021 level due to emerging threats.

"The macroeconomic environment is expected to remain stable despite the likelihood of a rise in inflation, weakening of the Kenyan Shilling and significant rise in energy prices," he said.

Farming, which is the biggest economic sector, contracted 0.2% due to poor rainfall in 2021, Macdonald Obudho, director general of the Kenya National Bureau of Statistics, said.

Accommodation and food services surged 52.5% after contracting 47.7% in 2020, while transport and storage grew 7.2% after shrinking 7.8% a year earlier, Obudho added.

Kenya is holding an election for president, the legislature and local authorities on Aug. 9, which could heighten political risk due to eruption of violence in past polls in 2007 and 2017.

Its dollar bonds are the second worst performer among African issuers since February, falling 15% in the period.

Nevertheless, Kenya still plans to issue a second Eurobond this fiscal year, Yatani told Reuters, dismissing an internal Treasury document which last week suggested it could be shelved due to a surge in yields.

"Before the end of June we are issuing one... It was part of our financing plan for this financial year. We want to be predictable," Yatani added.

(Reporting by Duncan Miriri; Additional reporting by George Obulutsa and Marc Jones; Editing by Alexander Smith)