Economic expansion in the East African nation slowed to 4.1 per cent in the first quarter of this year from 5.2 per cent a year earlier. A spate of gun and bomb attacks have scared away tourists, while low rainfall curbed farm output.
But the International Monetary Fund (IMF) told a news conference the increase in lending to manufacturers, renewed foreign investor interest, mainly in the extractive industries, and stable macroeconomic policies would support overall growth.
"These are also supporting signals that are positive for increased growth, certainly if not immediately, then over time," Mauro Mecagni, who led an IMF appraisal mission to Nairobi, said at the end of the visit.
The IMF expects Kenya's economy to grow by 5.5-6 per cent this year and Mecagni said data from one quarter alone was not enough to warrant an immediate review of the projection.
The government expects the economy to grow by 5.8 per cent this year while the World Bank forecasts 4.7 per cent.
Kenya's debut Eurobond, which was oversubscribed by five times last month, reinforced the sense of confidence, Mecagni added. The IMF also expects 47 new counties, created last year to decentralise government, to help economic growth by channelling development funds more effectively, the IMF said.
The counties have struggled to use their budgets effectively in the fiscal year ended June.