Uganda’s economy shrinks for the first time in decades in 2020

Largely empty street in Kampala
Namirembe Road in downtown Kampala during the Covid-19 lockdown. Credit: Kampala Capital City Authority – KCCA (Facebook)

Uganda’s economy shrank in 2020 for the first time in more than a decade as measures to control the coronavirus pandemic ground several sectors to a halt, figures published on Monday showed.

Gross domestic product fell by 1.2 per cent year on year to Shs126.9 trillion in the twelve months to December, seasonally adjusted estimates from the Uganda Bureau of Statistics showed.

The figure is the slowest since 1985, according to World Bank data, the last calendar year Uganda’s output fell.

The contraction is the clearest sign of the impact of the Covid-19 pandemic and the government measures taken to mitigate the spread of the virus on economic activity.

Quarterly growth

The estimates, however, show that economic activity rebounded in the last three months of the year after three straight quarterly declines. GDP growth in the quarter came in at 1.6 per cent year on year, buoyed by public administration activity, construction, and human health and social work.

The quarter marked a return to growth after the country fell into recession, registering yearly declines of 0.5 per cent in the third quarter, 5.7 per cent in quarter two, and 0.5 per cent in the first three months of 2020.Chart showing Uganda's quarterly GDP growth between 2017 and 2020

Full year sector accounts

The services sector was the most heavily affected by the slowdown in activity in 2020, shrinking by 3.2 per cent year on year to Shs54 trillion and down from the 7.3 per cent increase registered in 2019.

At the sub-sector level, the steepest decline came from professional, scientific, and technical services output, down 49.4 per cent. Education output decreased by 24.4 per cent, and accommodation and food service output dropped 22.6 per cent.

Meanwhile, public administration services flourished from government activities aimed at containing the virus, their output increasing by 18.3 per cent and contributing more than any other sub sector to economic growth. They were followed by real estate activities, up 6.4 per cent, trade and repairs which grew 2.8 per cent, and information and communication services output, up by 13.8 per cent.

The agriculture, forestry and fishing sector registered growth of 0.7 per cent largely due to rise in output from livestock and cash crops. Livestock sub sector output rose 7.8 per cent while cash crops output increased by 6.6 per cent.

Industry output rose to Shs34.8 trillion, 0.6 per cent higher compared to the previous year. Growth in the sector was driven by mining and quarrying output, up 5.8 per cent, while the water sub sector rose 4.2 per cent. Manufacturing output however fell by Shs227.2bn, a far cry from the Shs1.5 trillion growth registered in 2019.

Taxes on products declined by 2.6 per cent to Shs8.4 trillion; in 2019, taxes on products rose 9 per cent.

The seasonally adjusted GDP estimates are subject to revisions in subsequent releases “as future data become available”.

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