Uganda flag Uganda: Economic outline

Economic Outline

Economic Indicators

Uganda is the third-largest economy in East Africa, after Kenya and Tanzania. The country has achieved astonishing economic performances in the last decades and, although slower, growth remains sustained. Between 1992 and 2010, the country experienced average economic growth of 8%, GDP per capita tripled and the poverty rate was cut in half. The Ugandan economy has shown resilience overcoming recent successive challenges, leading to a growth in GDP to 5.3% during FY23, compared to 4.7% in the preceding year (World Bank). Private consumption witnessed growth, but public investment was reduced due to limited fiscal space, and private investment retreated in response to a stringent monetary policy stance throughout the fiscal year. Uganda's economic growth is projected to surpass 6% annually in the medium term as the Bank of Uganda (BOU) implements monetary policy relaxation. Further growth will be driven by the resurgence of tourism, alongside government initiatives to diversify exports and promote agro-industrialization, as well as investments in supporting crude oil exports. However, significant downward risks persist due to disruptions in global financial conditions and increasingly erratic weather patterns.

Benefiting from the government's endeavors towards fiscal consolidation, the fiscal deficit decreased in FY2023. The total deficit, encompassing grants, reduced from 7.4% of GDP in FY2022 to 5.6% in FY2023. This consolidation was primarily propelled by decreased development spending. Fiscal revenue remained broadly unchanged at 14% of GDP, below the target specified in the Domestic Revenue Mobilization Strategy (DRMS). Through fiscal consolidation efforts, the deficit is projected to decrease to approximately 3.4% of GDP in FY2024. In FY2023, the current account deficit stood at 7.9% of GDP, remaining largely stable compared to FY2022. Despite the recovery in goods exports, tourism, and remittances, the deficit was offset by a significant increase in imports (data World Bank). The country’s debt-to-GDP ratio was estimated at 48.3% in 2023 by the IMF, with a minor decline expected over the forecast horizon (to 46.3% by 2025). Following its peak at 10.7% in October 2022, inflation steadily decreased, falling below the Bank of Uganda's (BOU) target of 5% by June 2023. This decline was attributed to lower international commodity prices, fiscal consolidation efforts, and tight monetary policy. Annual headline and core inflation rates stood at 3.5% and 3.3%, respectively. With the consistent trend of low inflation and reduced inflation expectations, the BOU reduced its policy rate to 9.5% in August 2023, down from the 10% level maintained for 10 consecutive months.

Uganda has surpassed the Millennium Development Goal (MDG) of halving poverty by 2015, but the poverty rate has recently increased, also due to the effects of the pandemic. According to the World Bank, enhanced growth has the potential to decrease poverty (assessed at the USD 2.15/day international poverty threshold) from 41.7% in 2023 to 40.7% by 2025. However, the rate of poverty alleviation will hinge on the evolution of food access and affordability, as well as the occurrence of weather-related and environmental shocks, given households' constrained adaptive capabilities. Data from the World Bank shows that unemployment was estimated at 2.9% in 2022; nevertheless, the share of people active in the informal market is still high.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 47.5751.8256.3162.0667.46
GDP (Constant Prices, Annual % Change) 6.34.85.66.56.7
GDP per Capita (USD) 1,0821,1391,2021,2861,351
General Government Gross Debt (in % of GDP) 49.949.949.748.646.8
Inflation Rate (%) 7.25.43.84.95.0
Current Account (billions USD) -4.17-3.97-4.09-4.69-3.87
Current Account (in % of GDP) -8.8-7.7-7.3-7.6-5.7

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Uganda Shilling (UGX) - Average Annual Exchange Rate For 1 ZAR 232.51271.50281.18259.50225.51

Source: World Bank, 2015

 

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Latest Update: May 2024