Kenya’s real GDP growth was projected at about 4 per cent in 2008, a decline from the 6.5 percent estimated for 2007, but is expected to start recovering to pre-crisis levels in 2009. This fall is due to the disruption of the free flow of goods, labor and services that occurred in the first two months of 2008. Tourism was highly affected and manufacturing and agriculture also declined. Following the political settlement, economic activity is returning to normal. Tourism may take longer to recover and the displacement of over 300,000 people, including farm workers, will continue to hamper agriculture. However, favorable weather conditions, including timely rains in 2008 are expected to help recovery efforts. Meanwhile, inflation shot up as the domestic disruption added to already existing pressure due to high food and oil prices, and is expected to be 18.5% in 2007/08 before moderating in 2009.

On the fiscal front, pressure for extra spending will rise to fund reconstruction, resettlement of displaced people, the large size of the national coalition government and the newly established commissions. Additionally, with a slowdown in the global economy, remittances are likely to fall. The Government has estimated the cost of reconstruction and related measures at KSh31.5 billion, equivalent to US$500 million. The government is seeking additional financing from the donor community.

The Kenya's economic outlook remains positive as economic reforms will continue to shape policy. Reconstruction is the main priority in the short term. An economic recovery package is in place and investor conferences and consultative group meetings are also planned. In June 2008, the government launched the long-term development strategy, Vision 2030 and the first Medium Term Plan for 2008-2012. The focus will be on reconstruction, deepening structural reforms and governance, improving infrastructure, reducing income inequality and creating jobs.