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Economy projected to grow at 7%, says IMF experts

By Ali Twaha

Added 29th November 2018 02:15 PM

The growth outlook for the Ugandan economy also remains positive, driven by the anticipated peace in South Sudan, following the recent peace deals and also support developments in the oil and gas sector.

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The growth outlook for the Ugandan economy also remains positive, driven by the anticipated peace in South Sudan, following the recent peace deals and also support developments in the oil and gas sector.

BUSINESS, ECONOMY

The economy is projected to grow at nearly 7%, up from 6.1% the previous year as the country prepares to complete some of its major infrastructure projects, according the latest regional economic outlook by the International Monetary Fund (IMF).

The growth outlook, according to IMF resident representative Clara Mira, will be largely driven by a pickup in sectors of manufacturing, construction, agriculture and completion of some major infrastructural investment projects.

“In the year that ended in June 2017/18, growth was at 6.1% as manufacturing and construction continue to recover.

In the medium term, what we see is that when infrastructure investments are completed and provide better facilities to private sector, growth could reach 7%,” Mira said. She was speaking during the launch of the report at Makerere University Business School on Tuesday.

The growth outlook for the Ugandan economy also remains positive, driven by the anticipated peace in South Sudan, following the recent peace deals and also support developments in the oil and gas sector.

But the outlook is surrounded by signifi cant down risk. In the medium term, Miria said: “We see infl ationary pressures is starting to pick up reaching 3% in October, triggered by the shilling depreciation due to global commodity prices.”

“In 2017/2018 private sector credit growth has been recovering, rising by nearly 11%, which is double that of last year.

This is benefi tting many of the sectors. But this is mostly in shillings, meaning the private sector is growing more in shillings than in dollars,” she said. Over the year, the shilling has depreciated by 6.3% on the back of strong dollar demand from oil and gas sector, manufacturing and telecommunications sectors.

Regional outlook She said the macroeconomic outlook for the sub-Saharan Africa continues to strengthen with growth expected to increase from 2.7% in 2017 to 3.1% in 2018.

The projected outlook, according to the report, refl ects domestic policy adjustments and a supportive external environment, including continued steady growth in the global economy, higher commodity prices and accommodative external fi nancing conditions.

The report said the global economy is entering a period of unusually elevated policy uncertainty, with growth slowing down in most of the advanced economies and could slow more sharply in the event trade tensions escalate. “Spikes in commodity prices and populist pressures in the run up to elections in several countries could derail consolidation efforts,” it read in part.

To sustain the outlook for the economy, Francis Kamulegeya, partner, PricewaterhouseCoopers Uganda said it requires more effective spending from Government and increased investment in critical sectors, such as agriculture, that have the potential to drive the economy and increase productivity.

“Growth will be felt by many Ugandans if it translates into more jobs and employment opportunities. For agriculture, if we know now that the harvest is going to be very good, let’s not wait for a problem in March when the maize is drying and there are no storage facilities,” he said.

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