OVER the past one year or so, the global financial crisis has been intensifying daily. Many developed countries, such as the UK, USA, Japan, Germany and China, have come up with a stimulus package for their economies to counter an anticipated further slow
OVER the past one year or so, the global financial crisis has been intensifying daily. Many developed countries, such as the UK, USA, Japan, Germany and China, have come up with a stimulus package for their economies to counter an anticipated further slow-down.
In addition to stimulating their own economies, the countries are anxious to strengthen international financial regulation and to address faltering international business and consumer confidence.
The stimulus packages are being used to fund national infrastructure and social welfare projects and to provide income as a consumption support. The EU too has unveiled an economy stimulus package to help Europeâ€™s worst-hit banks.
What are developing countries like Uganda doing to bolster their weakening economies and help counter the effects of the global economic crisis?
The recession affects negatively the peopleâ€™s purchasing power negatively due to reduced disposable income. When the disposable incomes decrease, spending decreases overall.
This is exactly what is currently happening in Uganda and the situation may worsen in due course.
Durable goods, or larger purchases such as houses and cars that are meant to last a while, have and may be very hard hit by the recession.
There are signals and warnings of employee layoffs in some companies.
This scenario is expected to prevail until the financial situation improves. With slowing export and investment growth, product prices will hike further, reduced remittances, declining consumption and severely depressed stock and property markets for Uganda are envisaged this year. Uganda economic growth for next year could be lower, compared to the past years, if the global crisis continues.
Given the above facts, Uganda also needs an economy stimulus plan to support demand, loosen credit and encourage lending and to have a more â€œpro-active fiscal policyâ€ to strengthen the economy.
Uganda, like other countries, needs to position itself strategically to avoid being walloped by the crisis. The Government should quickly unveil Ugandaâ€™s economy stimulus package to the citizen.
The writer is a PhD student at Leeds Metropolitan University
Uganda should also unveil an economy plan