Country Report Uganda October 2009

Outlook for 2010-11

• Opposition to the rule of Ugandan president, Yoweri Museveni, will intensify and a leadership rival could emerge from within the ruling party to take advantage of the seemingly popular dissatisfaction with the president.
• Mr? Museveni will face serious opposition from the Buganda kingdom, but the Economist Intelligence Unit expects him to mollify this with assurances about land rights and resources, and win a fourth term in the 2011 election.
• We expect interest rates to remain low in 2010-11 in response to slower economic growth. The Bank of Uganda (BoU, the central bank) will focus on improvements to regulations to tighten liquidity and improve credit access.
• Weak global demand will hurt Uganda's open economy and hamper trade growth. Real GDP growth is forecast to be 5% in 2010, rising to 6.5% in 2011.
• Food prices will remain high, driven by strong regional demand and a loose monetary policy, but we forecast a slight fall in the inflation rate from 12.6% in 2009 to an average of 8.8% in 2010-11 as better weather lowers food prices.
• Uganda's current-account deficit is expected to narrow slightly as a percentage of GDP in 2010 in line with the shrinking trade deficit, before widening again in 2011 as capital imports for infrastructure spur import growth.

Monthly review

• At least 21 people died and hundreds were arrested during two days of rioting in mid-September as a row with the Buganda kingdom over aspirations of self-government boiled over.
• Opposition politicians have allied themselves with the Buganda cause as the fracture has grown in significance??