Uganda GDP growth flat on slower taxes on products

Economic growth in Uganda failed to bounce back in the fourth quarter of 2018/2019, after a slowdown in the first three months of 2019, following slower growth in taxes on products and the services sector.

Gross domestic product rose at an annual rate of 5.4% in the three months to the end of June, the same (revised) percentage growth seen in the first three months of the year, seasonally adjusted estimates from the Uganda Bureau of Statistics show. GDP is the total of all goods and services produced in an economy over a certain period of time.

Chart showing Uganda's real GDP growth in the three months to the end of June 2019

Taxes on production and imports grew at a slower 2.6% compared to 6.8% in the previous quarter while the services sector expanded at 6.2%, slower than the 6.3% recorded in the previous three months. Information and communication, the economy’s largest sub-sector in the quarter, posted growth of 5.8% which is a percentage point lower than in the previous quarter.

The services sector was still the largest contributor to real GDP growth, increasing to Shs8.8 trillion and equivalent to 53.3% of total GDP. Expansion in services was driven by a rise in information and communication and trade and repairs.

Industry rose 5.4% to Shs3 trillion, largely due to robust growth in manufacturing and mining and quarrying, 5.6% and 18.7% respectively. In the first three months of the year, manufacturing increased by 1.9% while mining and quarrying rose 7.4%.

The agriculture, forestry and fishing sector posted growth of 4.6% to Shs3.4 trillion, with food crops rising 4.5% and cash crops increasing by 10.8%.

Quarter on quarter real GDP growth in the three months to the end of June was 1.3%, rebounding from the 0.3% expansion recorded in the first quarter of 2019.

The biggest contributor to the rebound in real economic growth over the two quarters was value added by the industry sector, which increased 2.3% largely due to rises in mining and quarrying and manufacturing.

Value added by agriculture, forestry and fishing rose 2.0% on growth in cash crops, food crops and forestry. Services rose 0.7% driven by value added in information and communication, accommodation and food service, and trade and repairs. Still, there were negative sizable contributions to growth from education and public administration.

Taxes on production and imports rose 1.2% from the previous quarter, recovering from a decline of 0.5% in the prior quarter.

Related: Economy gets off to a slower start in 2019