Bad Economy: Experts put Uganda’s growth at 5 percent

Bad Economy: Experts put Uganda's growth at 5 percent
The Ugandan economy has grown at a much slower pace than in the past. Courtesy Photo.

Top economic experts are all agreed that Uganda’s economy will grow at about five percent this financial year.

Outlooks by key national players like Uganda Bureau of Statistics, Bank of Uganda, PriceWaterHouseCoopers all point that the economy would grow at between five and 5.5 percent.

This projection, if it turns out true, would be a significant improvement on the 2015/16 economic growth of 3.9 percent, according to the government, although the International Monetary Fund (IMF) put it at 3.5 percent.

PriceWaterHouseCoopers (PwC) in its latest report on Uganda says the economic outlook for the financial year 2017/18 is positive, with real GDP growth expected to reach five percent.

According to PwC, with the prevailing strong macroeconomic fundamentals in the country, Uganda now has the right economic environment to drive growth in the economy.

PwC bases its analysis on the annual headline inflation which is under control and within single digits despite the recent sharp increase in food prices as well as the shilling that has been relatively stable lately.

In its assessment, PwC says a combination many factors, together with the accelerated investments in the oil and gas sector, should spur economic activity this financial year.

Growth, according to PwC, will mainly be driven by strong performance in the industry and services sectors, and also by public infrastructure investment and other investments in priority sectors.

PwC says investment in the large infrastructure projects should result in a boost in the manufacturing sector as well as the services sector, notably tourism.

It adds that rising private consumption and a recovery in private sector credit growth should also result in an increase in domestic consumption.

While announcing the Monetary Police Statement for October 2017, the Governor of the Bank of Uganda (BoU) Emmanuel Tumusiime Mutebile said the economy is projected to grow between five and 5.5 percent, basing on inflationary outlook by the statistics bureau.

According to Mutebile, BoU forecasts indicate that the inflation outlook remains unchanged since the last Monetary Policy Committee meeting in August 2017, with annual core inflation forecast to remain within the target range of five percent over the short to medium-term.

The BoU reduced the CBR by 0.5 percentage points to 9.5 percent given that annual core inflation is forecast to remain around the medium-term target of five percent and economic activity is slowly gaining momentum.

The World Bank, in its latest economic growth projection for Uganda also estimates growth of 5.1 percent, above the Sub-Sahara African average of 2.4 percent.

In its Africa Pulse report on Uganda, the World Bank says from 5.1 percent in 2017, the economy is expected to expand to 5.8 percent in 2018.

The World Bank notes that Uganda has made limited progress in improving human development although the National Development Plan (NDP II) envisages significant investments that could contribute to increased human capital development.

According to the World Bank, Uganda, with a significant share of the active labour force of 35.5 percent engaged in entrepreneurship, is one of the world’s most entrepreneurial nations but lacks a dedicated strategy or policy and comprehensive programme to support it effectively.

In order for the country to achieve lower middle income status, she must have sustained economic growth of over 10 percent for at least a decade.

URN