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UGANDA
Table 1
Recent developments
2015
Population, million
39.0
GDP, current US$ billion
27.4
GDP per capita, current US$
702
Poverty rate ($1.9/day 2011PPP terms)a
34.6
Poverty rate ($3.1/day 2011PPP terms)a
65.0
Gini Coefficient a
41.0
Life Expectancy at birth, yearsb
57.1
Sources: World Bank WDI and M acro Poverty Outlook.
Notes:
(a) M ost recent value (2012)
(b) M ost recent WDI value (2014)
Uganda is expected to grow at 5.5 percent
during FY16/17, higher than the 4.6 percent achieved in FY15/16. This is mainly
in the account of acceleration of implementation of major public investment projects
as well as an expected surge in private
investment following an accommodative
monetary policy. Growth will further peak
at 5.9 percent in FY17/18 and 6.5 percent
during FY18/19 reducing extreme poverty
to 31.5 percent. Implementation delays,
regional instability, currency depreciation,
high interest rate, and volatile commodity
prices remain the main challenges.
Uganda’s GDP growth rate averaged 7.3
percent between 2000 and 2010. Poverty
reduction was likewise impressive, driven by agricultural income growth along
with prudent macroeconomic and fiscal
management. However, widening socioeconomic and spatial disparities—
accentuated by the lagging performance
of the Northern region—present challenges that must be addressed. The economic slowdown between 2010 and 2013
was triggered by the 2009 global economic crisis and was amplified by inefficient utilization of public resources, successive droughts, and sub-regional political instability.
Over the past year, growth decelerated to
4.6 percent due to the recent global economic slowdown, declining commodity
prices and the currency depreciation
(which increased imported factor costs
and adversely affected the manufacturing
sector). Public investments in infrastructure and the expanding service sector
(including telecommunications and financial services) are the present drivers of
economic growth. The share of agriculture in GDP declined, but the sector continues to provide close to 70 percent of
total employment.
Election induced uncertainties and external factors generated macroeconomic
volatility with inflation rates rising to 8.5
percent end 2015. A restrictive monetary
policy, which led to higher interest rates,
helped mitigate inflationary pressures
FIGURE 1 Uganda / Contributions to annual GDP growth
but
negatively
affected
economic
growth. On the external side, lower oil
prices reduced the import bill and
freight charges. However, exports, FDI
flows, and transfers remained subdued
by sluggish global growth, low commodity prices, and continued instability in
South Sudan and the Congo (DRC). The
fiscal deficit for FY15/16 rose to 6.6 percent of GDP due to increased investments in roads and energy. The risk of
debt distress remains low according the
recent World Bank-IMF Debt Sustainability Assessment although the domestic
debt stock is increasing.
Outlook
The economy is projected to accelerate to
5.5 percent in FY16/17. Acceleration of
growth should reduce poverty further by
an estimated 0.7 percentage points per
year over 2016-2018 period down to 31.5
percent by 2018/19, although this could
mainly be recorded in the central and
western regions, widening regional spatial disparities.
Construction and services sectors are expected to remain the main drivers of
growth, particularly as ICT and tourism
sectors benefit from a depreciated shilling
and regional stability. Industry is projected to grow at 7.0 percent in FY16/17 supported by stronger public investments and
a renewed impulse on FDI in the extractives sector. Private investments will intensify following the recent granting of oil
production licenses.
FIGURE 2 Uganda / Poverty rate and GDP per capita
Percent
15
GDP per capita
Percent
10
90
1,600,000
80
1,400,000
70
1,200,000
60
5
1,000,000
50
0
800,000
40
600,000
30
-5
-10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Public consumption
Total investment
GDP growth
Source: World Bank staff using UBOS.
Private consumption
Net exports
20
400,000
10
200,000
0
0
2002 2004 2006 2008 2010 2012 2014 2016 2018
$3.1/day PPP
$1.9/day PPP
Sources: UNHS and World Bank staff projections.
MPO 282 Oct 16
GDP per capita (RHS)
The fiscal deficit is projected to decline
to 6.4 percent of GDP in FY16/17 as expenditures slightly decline in a postelection year. However, it is expected to
further decline to 5.3 percent of GDP in
FY17/18, on account of gradual improvements in revenue mobilization. The current account balance will be buoyed by
the tourism industry, but may be constrained by lower export earnings and
remittances from a weak Chinese economy and potential weaknesses in the
global economy, as well as the expected
rise in construction-related imports.
However, as international oil prices recover, FDI especially in oil related sectors, will compensate for the gradual
decline in official aid.
Risks and challenges
There are substantial fiscal management
risks, particularly the sequencing and
management of the public infrastructure
development program, and the slow
progress on domestic revenue mobilization, and increased spending pressures
including those emanating from electoral promises.
The negative effects of weaknesses in
European and Asian economies and of
instability in South Sudan and DRC on
exports from Uganda, are yet another
challenge. Moreover, an even weaker
China could adversely affect financing
TABLE 2 Uganda / Macro poverty outlook indicators
Real GDP growth, at constant market prices
Private Consumption
for Uganda’s planned investments in
infrastructure development program.
Other macroeconomic vulnerabilities
include currency depreciation, inflation,
and high interest rates. Financing remains a major constraint for many firms
either as a result of outstanding payment
from government, slow disbursement of
foreign investment, and rigidity of commercial bank operations.
Lastly, the persistent high rates of poverty
in the Northern region and regional instability pose a challenge on attainment of
the twin goals.
(annual percent change unless indicated otherwise)
2013
2014
2015
2016 f
2017 f
2018 f
3.3
4.8
5.0
4.6
5.6
6.0
0.1
1.7
11.8
7.7
9.1
8.5
-4.2
9.2
17.6
19.4
3.3
13.4
Gross Fixed Capital Investment
9.2
3.3
1.0
5.6
7.2
7.9
Exports, Goods and Services
6.7
0.0
-7.5
0.9
8.5
9.2
Imports, Goods and Services
0.0
-6.4
15.5
16.5
16.0
16.8
Government Consumption
Real GDP growth, at constant factor prices
3.5
3.9
5.2
5.1
5.6
6.0
Agriculture
1.8
3.0
3.0
3.2
4.3
4.5
Industry
4.3
3.9
7.9
4.0
7.0
9.0
Services
4.0
4.3
5.3
6.3
5.7
5.5
5.5
4.3
5.2
7.7
6.3
5.0
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
-8.1
-10.7
-10.4
-11.5
-11.2
-9.9
Financial and Capital Account (% of GDP)
5.1
7.8
7.4
8.5
8.2
6.8
Net Foreign Direct Investment (% of GDP)
4.6
4.3
4.4
3.8
4.6
4.7
Fiscal Balance (% of GDP)
-4.1
-3.7
-4.6
-6.5
-6.2
-5.3
Debt (% of GDP)
28.5
32.9
32.0
31.4
34.2
46.4
Primary Balance (% of GDP)
-2.7
-2.1
-2.7
-4.6
-4.4
-2.8
Poverty rate ($1.9/day PPP terms) a,b,c
34.6
34.3
33.9
33.5
33.0
32.4
Poverty rate ($3.1/day PPP terms) a,b,c
65.0
64.7
64.3
64.1
63.6
63.0
So urces: Wo rld B ank, M acro eco no mics and Fiscal M anagement Glo bal P ractice, and P o verty Glo bal P ractice.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2012-UNHS.
(b) P ro jectio n using po int-to -po int elasticity at regio nal level with pass-thro ugh = 1based o n GDP per capita in co nstant LCU.
(c) P ro jectio ns are fro m 2013 to 2018.
MPO 283 Oct 16