Uganda’s economic outlook for the financial year 2017/18 is positive, with real GDP growth expected to reach 5%.
Uganda’s economic outlook for the financial year 2017/18 is positive, with real GDP growth expected to reach 5%. With the prevailing strong macroeconomic fundamentals in the country, we now have the right economic environment to drive growth in the economy. As of now, annual headline inflation is under control and within single digits despite the recent sharp increase in food prices. The Shilling has been very stable lately and as of last month it had strengthened slightly against the US Dollar. The BOU Central Bank Rate (CBR) is also at its lowest ever at 10%. Following this reduction in CBR, most banks have followed suit by reducing their prime lending rates. Currently, commercial bank lending rates are the lowest they have been for a while, with the average lending rates across the industry down to 19%. This will result in a recovery of the private sector credit. In addition to all the above good macroeconomic environment, the negative external shocks that have been affecting growth of the economy are also expected to soften going forward.
A combination of all these factors, together with the accelerated investments we are beginning to see in the oil and gas sector, should spur economic activity this financial year. Growth 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. Investment in the large infrastructure projects should result in a boost in the manufacturing sector as well as the services sector, notably tourism. Rising private consumption and a recovery in private sector credit growth should also result in an increase in domestic consumption.