Economic Outline

Economic Indicators

Uganda is the third-largest economy in East Africa, after Kenya and Tanzania. The country has achieved astonishing economic performances in the last decades and, although slower, growth remains sustained. Uganda has navigated the post-pandemic recovery well and remained resilient amid global economic challenges, with growth rising to 6.1% in FY24 from 5.3% the year before. This was driven by broad-based expansion in services (43.1% of GDP) and industry (24.9%), supported by stronger net exports—particularly coffee and gold—greater oil sector investment, and easing global supply chain pressures. According to the World Bank, growth is projected to rise slightly to 6.2% in FY25, led by agriculture and services. Over the medium term, it is expected to accelerate to 10.4% by FY27 with the start of oil production, before stabilising around 6% as output levels off. While oil sector developments are set to drive growth, global trade policy uncertainty and falling commodity prices could weigh on investment and economic performance.

Regarding public finances, Uganda’s fiscal deficit narrowed slightly to 5.1% of GDP in FY24 from 5.2% in FY23, reflecting ongoing consolidation driven mainly by cuts to capital spending. The primary deficit declined to 1.6% but remains affected by weak tax revenue performance, partly due to poor enforcement of the electronic fiscal receipting system. The quality of consolidation remains a concern, with essential social programmes impacted. The deficit was largely financed domestically. The primary balance is expected to worsen to -2.3% in FY25, then gradually improve to a 0.1% surplus by FY27. Efforts to boost domestic revenue—focusing on tax administration and fairness rather than rate increases—are projected to raise tax revenue by 0.5% and 1.3% of GDP in FY25 and FY26, respectively. Public debt is forecast to rise to 52.7% of GDP in FY25, then decline to 51% by FY27 (data World Bank). Headline and core inflation dropped to 3.2% and 3.0%, respectively, in FY24, down from 8.8% and 7.4% in FY23, remaining below the Central Bank’s 5% target. The decline was driven by favourable weather lowering food prices, global economic easing, exchange rate stability, and tight monetary policy. Core inflation is projected to rise to 3.7% in FY25 and reach 5% in FY26. As per the World Bank, Uganda’s key challenges include a persistent human capital gap and the absence of a robust productive jobs strategy amid a growing working-age population. While services dominate the economy, they generate fewer jobs than agriculture, which employs two-thirds of the workforce but suffers from low productivity, limited modernisation, and vulnerability to climate shocks. Moreover, climate adaptation efforts remain insufficient.

According to the National Bureau of Statistics, the unemployment rate stood at 12.3% as of 2024. Poverty at the international poverty line (USD 2.15 in 2017 PPP) was estimated at 41.3% in the same year and is projected to decline slightly in FY25, with a faster reduction expected as economic growth strengthens in the medium term. If oil revenues are effectively invested in social services, infrastructure, and human capital, poverty could drop to 38% by 2027. Lastly, the country’s GDP per capita (PPP) was estimated at USD 3,683 in 2024 by the IMF.

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