Country Report Uganda January 2009

Outlook for 2009-10

• The president, Yoweri Museveni, will need all his political skills to defuse growing regional pressures in Uganda and stabilise the ruling National Resistance Movement (NRM) as ambitious politicians bid to succeed him.
• Falling global demand will hurt Uganda's open economy and hamper trade growth. The Economist Intelligence Unit has revised down the economic growth forecast to 5.1% in 2009 and 6% in 2010 (previously 6% and 6.3%).
• Real GDP growth rates of around 10% would be required to make a substantial impact on poverty, but Uganda is unlikely to achieve this over the forecast period, owing to infrastructure bottlenecks and the global downturn.
• We forecast a widening of the government deficit from 2.3% of GDP in 2008 to 3.4% of GDP in 2009 and 3.5% of GDP in 2010 as revenue growth fails to keep pace with expenditure growth.
• We expect a moderation in the inflation rate to an average of 7.2% in 2009 and 6.8% in 2010 as international food and oil prices ease.
• The trade deficit is expected to narrow in 2009 as oil prices fall, before beginning to slide in 2010 as import costs rise again. The current account is forecast to record deficits of 6.5% of GDP in 2009 and 6.6% of GDP in 2010.

Monthly review

• Forces from Uganda, Southern Sudan and the Democratic Republic of Congo (DRC) attacked the bases of the Lord's Resistance Army (LRA) in eastern DRC in December, destroying camps but failing to capture LRA members.
• The attack on the LRA has signalled the end of the government's willingness to pursue a peaceful solution. Uganda's actions drew a violent response as the LRA reportedly killed over 400 people in the DRC over the Christmas period.
• Another split has emerged within the NRM in the run-up to the January by-election in Ssembabule, where an NRM member will run as an independent against the party's candidate, highlighting a further lapse in party discipline.
• Fears of a large drop in government spending as the global downturn deepens were eased at the start of January when the IMF backed the 2008/09 budget (July-June), calling it an "appropriate modest stimulus".
• Fuel shortages have increased the cost of a litre of petrol to almost four times the official price owing to works on the Mombasa-Eldoret pipeline and the disruption of road haulage following new axle-load restrictions in Kenya.
• An international credit rating agency, Standard & Poor's, has assigned Uganda a B+ sovereign rating. However, plans to issue a sovereign bond have been postponed owing to the poor global financial outlook.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;20
NAICS Code: 52;311

This report covers the following industry codes:
SIC Code: 60;20
NAICS Code: 52;311