July 2025 East Africa Macro Outlook

Executive summary

Persistent trade tensions and elevated policy uncertainty continue to weigh on global supply chains, pushing up costs and disrupting market flows. However, the recent de-escalation in Middle East tensions boosted global risk appetite, prompting increased capital inflows to Kenya and Uganda. Stable commodity prices further supported both countries’ export receipts. Still, stalled US-EU trade talks, with President Trump’s July 9, 2025, tariff deadline looming, present downside risks for export growth.
Reduced tensions between Israel and Iran also curbed safe-haven capital flights and supported East African currency stability. The Kenyan shilling (KES) and the Ugandan shilling (UGX) remain broadly stable in June, buoyed by subdued forex demand, central bank interventions, and steady inflows from exports, remittances, and reserves. While both currencies are expected to remain stable in the near term, commodity price volatility and shifting global capital flows may introduce pressure.
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