Economic activity in Uganda has shown resilience despite global challenges, with the economy maintaining a strong performance. The World Bank's latest Uganda Economic Update reports that the country's real Gross Domestic Product (GDP) grew to 6.1% in the fiscal year 2023/2024, up from 5.3% the previous year. This growth was driven by gains in tourism, manufacturing, construction, and electricity production within the service and industrial sectors. Inflation averaged 3.2% during this period, falling below the central bank's target of 5%, attributed to diminishing global economic shocks, tight monetary policy, and stable exchange rates.
The Uganda Economic Update is a biannual analysis of the country's short-term macroeconomic outlook and is now in its 24th edition. It forecasts GDP growth to reach 6.2% in fiscal year 2024/2025. The commencement of oil production expected by late 2025/2026 could further enhance medium-term growth prospects if it reaches an output of 230,000 barrels per day. However, potential delays in oil production pose risks to this positive outlook. Inflation may remain near the central bank's target but could be affected by commodity price volatility, weather conditions, and exchange rate fluctuations. Additionally, national debt might increase to 52% of GDP due to expenditures related to the upcoming elections in 2026.
For sustainable and inclusive growth, Uganda needs to enhance domestic revenue mobilization to support essential spending on human capital development—particularly health and education—as emphasized in previous editions of the economic update.
Human capital development is crucial for long-term progress as it encompasses knowledge, skills, and physical health necessary for productivity. The current report emphasizes public investment in Early Childhood Development (ECD), which ensures children receive vital nutrition, healthcare, and education for their future productivity.
The report suggests three key recommendations for ECD: "Commit to a pathway of increased pro-equity public expenditure on ECD," "Create incentives for quality service delivery," and "Prioritize workforce development for ECD." Furthermore, four investment priorities are outlined: expanding primary healthcare and nutrition services focusing on underserved areas; providing one year of publicly financed pre-primary education through government schools; scaling up evidence-backed parenting programs; and developing affordable childcare options for women working informally with young children.