Ugandan economic growth is expected to rebound, IMF

Ugandan economic growth is expected to rebound next year as inflation eases and credit growth recovers, the International Monitory Fund said in a statement late Tuesday.

The IMF said Uganda's economy is likely to reach 6% during the 2013-14 fiscal year and increase to 7% by 2014-15. Uganda's fiscal year runs from July to June the following year.

However, the fund noted that the tight monetary policy adopted last summer to control runaway prices and inflation could hurt growth this year.

"Prices have been generally stable for the last few months and annual inflation is coming down," the IMF said. " Nonetheless, the tighter policies combined with weaker global demand are projected to reduce economic growth this year."

Runaway prices triggered nation-wide protests and strikes last year, threatening to overthrow the country's long serving leader, Yoweri Museveni. Last week, the National Bureau of Statistics said Uganda's economy was weighed down in the 2011-12 fiscal year by slower growth in manufacturing and services. Growth for the year is seen at 3.2%, down from 6.7% the previous year.

The country's manufacturing sector is dominated by primary processing industries, dealing mainly in raw commodities such as coffee, cotton, fish and horticulture products. Uganda is Africa's largest robusta coffee grower and the continent's overall leading coffee exporter.

The IMF noted that key risks to the country's growth outlook arise mainly from external factors, such as slower than expected global growth and higher energy prices.

Bariyo at Nicholas
Dow Jones Newswires
6 June 2012

The fund also noted that any deterioration in the security environment could weigh on growth. Uganda's main trading partners in the region, notably South Sudan and Eastern Congo, are currently facing looming security threats.