Recent Developments & Prospects

Macroeconomic Policy

Fiscal Policy

Monetary Policy

Economic Cooperation, Regional Integration & Trade

Debt Policy

Economic & Political Governance

Private Sector

Financial Sector

Public Sector Management, Institutions & Reform

Natural Resource Management & Environment

Political Context

Social Context & Human Development

Building Human Resources

Poverty Reduction, Social Protection & Labour

Gender Equality

Thematic analysis: Structural transformation and natural resources

Authors: Vera-Kintu Oling, Alexis Rwabizambuga, Alex Warren-Rodriguez

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  • In 2013 Uganda saw the consolidation of macroeconomic stability and a gradual recovery of economic activity, with real GDP growth projected to reach 5.2% in 2013 and 6.6% in 2014.
  • A fiscal and monetary policy stance focused on containing inflationary pressures has provided an enabling environment for economic growth by ensuring debt and exchange rate stability.
  • Uganda remains on track to achieve its Millennium Development Goal for poverty reduction by 2015 with absolute poverty continuing to drop, from 24.5% in 2009/10 to 22.2% in 2012/13.

In 2013 Uganda saw the consolidation of macroeconomic stability and a gradual recovery of economic activity, with estimates putting annual real gross domestic product (GDP) grow that 5.2%, up from 2.8% in 2012. This recovery in economic activity has benefited from a fiscal and monetary policy stance focused on containing inflationary pressures, while ensuring debt and exchange rate stability, thus providing an enabling macroeconomic environment for growth. Growth prospects, however, continue to be hampered by a relatively unfavourable investment climate for the private sector, as well as by capacity constraints in public sector investment and management. Projections for the AEO report indicate real GDP growth at 5.2% in 2013, on the back of strong exports and public investment, bringing real GDP growth closer to Uganda’s underlying growth potential of 7%. Our medium-term forecasts indicate a consolidation of these trends,with GDP growth reaching 6.6% in 2014 and 7% in 2015, and improvement of the current account balance and a mildly expansionary fiscal policy.

The most recent figures available from the Uganda Bureau of Statistics paint a mixed human development outlook in Uganda. The 2012/13 National Household Survey (UNHS) indicates absolute poverty has continued to fall, from 24.5% in 2009/10 to 22.2% in 2012/13, consolidating gains made in this sphere over the past two decades. However, progress has stalled and in some cases reversed in the areas of education, health and the prevalence of HIV/AIDS. The situation is particularly worrying in relation to HIV/AIDS and maternal health. Regarding the former, HIV prevalence rates (ages 15-49) have increased from 6.4% to 7.3% between 2005/06 and 2011, a rise largely attributed to an increase in high-risk sexual activities. Progress in reducing maternal mortality has stalled, with the latest figures putting Uganda’s maternal mortality rate at 438 deaths per 100 000 live births in 2011.

Value chain development is receiving increasing attention in Uganda, as a way of developing production capacities and enhancing value added generation in primary sectors. While Uganda has been relatively successful in tapping into a number of global value chains, such as those forfish, floricultural and horticultural products, growth prospects in these and other key product chains face a number of constraints. These include high production costs, including transport and energy costs, as well as weak product-specific policy and institutional frameworks that prevent the provision of adequate support to the development of selected value chains.

Table 1: Macroeconomic indicators

Real GDP growth2.85.26.67
Real GDP per capita growth-
CPI inflation14.
Budget balance % GDP-3-2.6-4.6-4.4
Current account balance % GDP-9-5.9-4.4-4.6

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.