daniel chigunweUganda’s economy is expected to pick up in 2024, following a slowdown in 2023. According to a recent report, the country’s real GDP growth is forecasted to reach 5.8% in 2024, after falling to 4.6% in 2023. This report highlights the sectors that are expected to drive this growth and the potential risks to this outlook.
One of the main drivers of growth is strong fixed investment. The development of Uganda’s oil sector continues to underpin investment growth, with projects such as the $10 billion Lake Albert Oil Project and the US$4 billion East Africa Crude Oil Pipeline attracting significant investment inflows.
This will see fixed investment contribute 2,2 percentage points (pp) to headline growth in 2024, marginally below the 2,5pp contribution expected in 2023. This is expected to keep demand for imported capital inputs elevated, leading to a real import growth of 9,2 percent in 2024.
However, the outlook for exports is brighter, the report noted.
“Our Agribusiness team forecasts that coffee production – which made up 24 percent of Uganda’s exports in 2022 – will grow by 5,3 percent in 2024, up from 4,8 percent in 2023,” Fitch stated.
This will be supported by improving yields, the expected maturation of coffee trees, and strong government incentives (via the National Coffee Policy). In all, this will underpin real export growth of 5,2 percent and see net exports’ drag on headline growth narrow from 4.1pp in 2023 to 2,1pp in 2024.
Moreover, the outlook for domestic consumption is also positive. Private consumption is expected to grow by 6,4 percent in 2024, contributing 5.6pp to real GDP growth. -Business Insider Africa
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