Uganda economic outlook hinges on domestic demand

October 8, 2015

Uganda’s economy could see a brighter outlook if the government speeds up investment projects and assures effective implementation of its 2015-2016 development packages.In the quarterly Monetary Policy Report released recently by a local think tank, the report said improved growth in the tourism sector next year would also be a factor to boost the economy after the expected general election slated for early next year.The report also highlighted another downward revision in the economic-growth forecasts for 2015 and 2016.The Bank of Uganda recently lowered this year’s growth forecast to 5.5 per cent from 6 per cent although figures published by local media were contradicting.That was the third downward revision, following the first two in March and June.Local financial analysts early this year was predicting that gross domestic product would grow by 6 per cent. The 2016 forecast was also cut to 5.2 per cent from 6.1 per cent in the latest review.The central bank cited several downside risks including a sharper slowdown in the regional economies like South Sudan its main source of market and a decline in the number of tourists and slow public investment processes.

Bank of Uganda (BOU) headquarters on Kampala road in Kampala in this photo i took in 2012
Bank of Uganda (BOU) headquarters on Kampala road in Kampala in this photo i took in 2012

Uganda economy still confronted risks from economic slowdowns in China and elsewhere in the region that could put further pressure on the Uganda export sector especially in South Sudan and Kenya.The local financial experts have revised their 2015 projection for exports to a contraction of 9 per cent, compared with the earlier estimate of 6-per-cent shrinkage. Its 2016 projection for export growth was cut to 3 per cent from 7 per cent.The Uganda Bureau of Standard management was recently quoted by local media to have slashed its estimate for this year’s exports to a contraction of 6.4 per cent, compared with the previous forecast of 2.9-per-cent growth.In the first seven months of this year, exports shrank by 8 per cent year on year. In a special lecture on counting down to infrastructure investment that despite the export shrinkage, a Ugandan financial expert told your blogger that border trade had continued to expand by around 20 per cent this year.The Bank Of Uganda has not yet included the government’s economic measures in its revision of its economic figures. If included, they would boost the country’s GDP growth estimates by more by 1.9 per cent.

Contador Harrison