Economy expands by 6.3%

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The economy grew by 6.3% in FY2024/25, up from 6.1% recorded in the previous year, according to revised estimates from the Uganda Bureau of Statistics (UBOS).

In nominal terms, the size of the economy increased to sh227.88 billion, from sh203.708 billion in FY2023/24.

The growth was mainly driven by increased aggregate demand, investment, and exports, as reflected in the performance of the agriculture, industry, and services sectors. Government programmes like the Parish Development Model (PDM), Emyooga, and other public investments also supported productivity and household income.

The services sector remained the leading driver of growth, accounting for 42.1% of the overall expansion, followed by agriculture (26.1%) and industry (24.3%). The report attributes this to stronger performance in trade, information and communication, financial services, manufacturing, and construction during the year.

According to the Ministry of Finance in the performance of the economy report for the month of September, growth momentum is expected to continue into FY2025/26, supported by stronger private sector activity and improving business confidence. High-frequency indicators of economic activity showed positive trends across several sectors.

The report shows that the recovery in the labour market continued, supported by increased business activity in key sectors. The services sector, particularly trade, transport, and accommodation, registered improvements in employment and output levels, consistent with rising demand and private consumption.

In the agriculture sector, growth was supported by improved crop yields due to favourable weather conditions and ongoing interventions under the Parish Development Model and agricultural mechanisation programmes.

The industrial sector benefited from higher manufacturing output, construction activity, and agro-processing, while the services sector continued to expand, driven by trade, communication, and financial services.

Macroeconomic stability also underpinned overall growth. The report notes that headline inflation remained contained within the medium-term target, averaging 4.0% in September 2025, compared to 3.8% in August. The moderation in core inflation and lower energy prices helped maintain purchasing power, while adequate domestic food supply supported price stability.

The Ugandan shilling appreciated by 1.8% against the US dollar in September 2025, trading at an average of sh3,507.79 per USD, down from sh3,573.13 per USD in August. The appreciation was largely attributed to increased offshore investor participation in local financial markets and sustained foreign exchange inflows from remittances, foreign direct investment, and commodity exports such as coffee and gold.

The Central Bank Rate (CBR) remained unchanged at 9.75% during the month, which the report notes was adequate to maintain core inflation within the Bank of Uganda’s medium-term target of 5% while supporting economic growth and private sector credit expansion.

In addition, lending rates declined, with shilling-denominated loans averaging 18.46% in August 2025, down from 19.65% in July 2025, while foreign currency loans averaged 8.34% compared to 8.35% the previous month.

Private sector activity also showed resilience, with the stock of outstanding private sector credit increasing by 1.1%, from sh23.79 billion in July to sh24.048 billion in August 2025. Credit growth was mainly driven by shilling-denominated lending, with notable increases registered in the transport and communication, mining, and community services sectors.

The Ministry of Finance projects that economic growth will remain strong in FY2025/26, supported by ongoing infrastructure development, oil and gas sector investments, export diversification, and increased domestic revenue mobilisation.

The report further highlights that the government will continue implementing fiscal and monetary policies aimed at sustaining macroeconomic stability, supporting production, and promoting inclusive growth.