Uganda’s economic growth continued to strengthen in the fourth quarter of 2018, expanding at the fastest rate in five quarters, figures from the statistics bureau show.
Gross domestic product, a measure of output in goods and services, rose 6.6% in seasonally adjusted terms from a year ago. It was the highest expansion recorded in five quarters, and also the second consecutive quarterly increase after growth slowed in the three months to June 2018.
Agriculture, forestry and fishing production rose 4.7%, while industrial output increased by 3.6% and services expanded 8.4% year on year.
The Ubos figures show that growth in the quarter was driven by expansion in the services sector, especially information and communication services, which grew 8.6%, and trade and repairs, which expanded by 6.5%.
Other key sub-sector contributors to growth were financial and insurance services which increased by 14.6%, education services which rose 6.9%, and food and crops production — classified under agriculture — which posted growth of 4.1%.
All sub-sectors posted increases in output save for mining and quarrying where growth fell 8.5%, down from growth of 7.5% in the previous quarter.
Quarter on quarter GDP growth
Compared with the three months that ended in September 2018, or the first quarter of the 2018/2019, GDP expanded 1.2%, helped by growth in trade and repairs, forestry, information and communication, and financial and insurance services. But the quarter on quarter increase was reduced from 2.2%, and was the slowest in four quarters.
The biggest declines in output from the previous quarter were in mining and quarrying which fell 12.2%, and construction which declined by 1.9%. The two sectors fall under industry, which reduced by 1.6%. On the other hand, agriculture, forestry and fishing production rose by 1.4% while services rose 1.7% from the previous quarter.
The World Bank expects Uganda’s economy to expand by 6% in the fiscal year that ends June 2019, driven by an anticipated increase in investments, particularly to support developments in the oil sector.
The Bank of Uganda says the economy is “currently operating around its potential growth rate of 6-6.5%” and supported by its “accommodative monetary policy stance, higher growth in government consumption and investment spending, strong pick-up in private investment and consumption spending, and improved agricultural sector performance.”
But the central bank says its high frequency indicators suggest softer growth in the first quarter of 2019. It also warns of increasing downside risks which include “unresolved trade tensions” and the impact of political and policy uncertainty in the global economy. The agriculture sector’s reliance of favourable weather conditions, delays in public investment programmers and a weaker currency could also constrain growth, it added.
“Therefore, the weakness in the first quarter could carry over to the coming quarters if these downside risks materialise,” Bank of Uganda said.