The World Bank has cut Uganda’s growth forecast for the current financial year to 7.4 per cent from 8.5 per cent, while raising its projection for the following year as the country prepares to begin commercial oil production.
Its October Africa Economic Update, released on Tuesday, puts growth in the year to June 2028 at 9.2 per cent, up from 8.1 per cent in April. The forecast for 2025/26 was lowered to 6.4 per cent from 6.8 per cent. The changes leave the bank expecting a later acceleration, with growth this financial year below the 10.2 per cent assumed in Uganda’s budget.
Uganda’s nearer-term downgrade contrasts with an improved outlook for much of sub-Saharan Africa. The bank now expects regional growth of 4.3 per cent in 2026, compared with 4.1 per cent in its April report, and says it raised forecasts for 35 of the 47 economies covered. Higher commodity prices and extractive output are supporting exporters such as Angola and Nigeria, while agricultural recoveries, domestic demand and reforms are helping growth elsewhere.
Eastern and Southern Africa is forecast to expand by 4.1 per cent this year. Within that region, the East African Community remains the fastest-growing bloc, with growth expected to reach 6.2 per cent from 5 per cent in 2025. The bank attributes that performance to domestic demand and sustained investment in Rwanda, Tanzania and Uganda, and expects the bloc to maintain a similar pace through 2028.
The benefits of higher commodity prices are uneven. The bank says the Middle East conflict has affected African economies mainly through fuel, fertiliser, food and transport costs and uncertainty, rather than a significant weakening in external demand. It identifies Uganda and Rwanda among economies where higher fuel costs and imports of machinery and construction materials are putting pressure on external balances.
| Forecast edition | FY2025/26 | FY2026/27 | FY2027/28 |
|---|---|---|---|
| April 2026 | 6.8 | 8.5 | 8.1 |
| October 2026 | 6.4 | 7.4 | 9.2 |
For Uganda, the expected acceleration depends on the move from oil investment to production and exports. In its June Uganda Economic Update, the bank said private consumption, services and recovering agriculture would support growth as construction of oil infrastructure wound down. Commercial production was then expected to drive faster growth from 2026/27, with meaningful oil exports beginning in the first quarter of 2027.
That report identified an oil-production delay as the most significant domestic risk, estimating that a year’s delay would reduce 2026/27 growth by more than two percentage points and postpone fiscal relief. October’s regional update lowers growth for that year and raises it for the next, but does not specify a revised first-oil assumption or explain how much of Uganda’s revision reflects production timing.
The June budget speech assumed commercial production would begin later in 2026. Government officials have since told Parliament’s finance committee production was expected before the end of June 2027, with the export pipeline ready to receive crude by mid-December 2026; pipeline readiness alone would not establish how much oil could be produced and sold before the financial year closes.
The budget’s fiscal framework projects Shs1.8tn in oil revenue, including capital gains tax, in 2026/27, rising to Shs5.6tn the following year. It also provides for a Shs1.4tn withdrawal from the Petroleum Fund this financial year. A later start to production could reduce receipts within the budget period, although the inclusion of capital gains tax means the entire oil-revenue estimate cannot be treated as dependent on crude sales.
The bank has also raised its projections for Uganda’s inflation, fiscal deficit and public debt since April. For 2026/27, it now puts inflation at 5.5 per cent, up from 4.2 per cent, and the deficit at 5.2 per cent of GDP, against 5 per cent. Public debt is projected at 55.3 per cent of GDP, compared with 53.4 per cent previously.
The next tests are whether pipeline completion is followed by production and exports early enough to generate revenue before June, and whether the Treasury revises its oil-receipt and spending assumptions. The budget annex does not separate capital gains tax from other oil receipts, leaving the size of the revenue exposure to a later production start unclear
