Kenya is among the countries expected to face rising economic pressure linked to the Iran conflict, with a new global report warning of possible food supply disruptions and growing debt challenges in the coming months.
According to the Global Peace Index 2026 released by the Institute for Economics and Peace (IEP), the impact is likely to be felt through higher food costs, fertiliser shortages and tightening financial conditions.
The report notes that although global attention is focused on military developments in the Gulf region, countries such as Kenya may experience indirect impacts through rising food prices, limited fertiliser supply and increased financial strain.
“The full economic impact of the Iran war might not be felt until the end of the year. Pakistan, Egypt and Kenya face US$5.1 billion in debt rollovers in November and December 2026, alongside disrupted harvests,” reads the report.
The findings come at a time when Kenya continues to deal with a heavy debt burden and concerns over the cost of living.
A major concern raised in the report is the role of the Gulf region in global fertiliser production. According to the report, Gulf states supply 45 per cent of the world’s sulphur and 50 per cent of global urea, both key inputs in fertiliser manufacturing.
“The reduction in supply hits as Q2 2026 planting begins across South Asia and East Africa, so the harvest shortfall will hit in late 2026 and early 2027,” the report states.
For Kenya, where agriculture supports millions of livelihoods and contributes significantly to the economy, any disruption in fertiliser supply could lead to lower crop yields, reduced food production and higher prices for consumers.
The report says East Africa is already under pressure from climate shocks, rising import costs and currency instability, making the region more exposed to external economic disruptions.
It further estimates that the global economic impact of violence reached Sh3.5 quadrillion in 2025, equal to 10.5 per cent of global GDP. Military spending alone accounted for Sh1.57 quadrillion, reflecting what it describes as a growingly unstable global environment.
IEP researchers say conflicts are increasingly interconnected, creating regional shocks that extend far beyond areas of active fighting.
The report also highlights the strategic importance of the Red Sea and East Africa as global trade routes face mounting pressure from instability.
“The Iran war is a force multiplier for the spread of conflict. It has amplified existing pathways by raising prices in import-dependent states, distracting Gulf countries that are supporting conflict, and highlighting the strategic importance of Red Sea ports,” reads the report.
Kenya’s reliance on imported fuel, fertiliser and industrial inputs is also flagged as a vulnerability, especially if shipping routes or global commodity markets are disrupted.
The report notes that such disruptions could directly affect businesses, households and overall economic stability.
This comes as Kenya works to stabilise public finances while maintaining growth, with the report warning that combined pressures from food inflation, fertiliser costs and debt refinancing could strain both government budgets and household incomes.
Beyond Kenya, the report paints a wider regional concern, noting that geopolitical tensions in the Middle East and the Horn of Africa are becoming more interconnected.
“The Horn of Africa is no longer a set of separate conflicts. The conflicts in Sudan, Ethiopia, Eritrea, South Sudan and Somalia are now interlocked through every channel that causes conflicts to spread,” reads the report.
It emphasised that as global conflicts become more linked, countries such as Kenya may face economic shocks originating far beyond their borders, with effects likely to be felt in food markets, farming and the cost of living.
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