The latest Central Bank of Kenya (CBK) chief executive survey indicates that CEOs are more optimistic about Kenya’s economic prospects over the next twelve months, pointing to resilient domestic demand, higher customer orders and festive‑season spending as key growth drivers.

Compared with the July survey, confidence in both business performance and the broader economy has improved, with firms expecting stronger activity in the final quarter of the year.

Respondents attribute the brighter outlook to robust domestic demand, increased orders and seasonal spending, according to the CBK’s summary of the survey.

The survey also highlights expectations of higher tourism arrivals, lower borrowing costs, better liquidity and a stable exchange rate as supportive factors for the festive‑driven boost.

Despite the optimism, CEOs note that elevated fuel, transport and other input costs are squeezing profit margins and reducing household purchasing power.

The CBK warns that adverse weather, geopolitical tensions and weaker external demand remain risks that could offset the positive momentum.

Business activity showed modest improvement in the third quarter, with demand orders either rising or holding steady across surveyed firms.

Growth was driven by tourism, crop harvesting, new product launches and both domestic and export orders, although weak consumer spending and rising production costs limited gains in some sectors.

Looking ahead, companies expect demand, sales and production to rise in the fourth quarter, propelled by holiday bookings, social events and seasonal consumption, with agricultural output also set to improve.

Sectoral expectations vary: tourism, ICT, financial services and wholesale‑retail trade are projected to benefit, while manufacturers face pressure from cheap imports, high input costs and subdued demand.

Although demand is expected to rise, 44.5 % of respondents anticipate difficulty scaling up production, and 14.6 % foresee significant challenges due to limited capacity, ageing machinery, raw‑material shortages and insufficient working capital.

Employment is projected to remain largely unchanged in the fourth quarter as firms aim to contain labour costs while meeting the anticipated demand surge.