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Uganda Country Risk Report Q1 2017

  • November 2016
  • -
  • Business Monitor International
  • -
  • 41 pages

Core Views

Ugandan growth will speed up in 2017 from a tepid pace in 2016. This will be on the back of delayed investment projects finally beginning construction, and an uptick in borrowing by businesses and consumers. Uganda's fiscal deficit will widen slightly in fiscal year 2016/17 as spending on large scale public infrastructure projects ramps up. Although revenue growth will accelerate due to the introduction of a number of new taxes, this will not be sufficient to cover rising expenditures. The Bank of Uganda will continue to cut the policy rate in the coming quarters in an attempt to bolster slowing credit growth and boost the economy.

While we expect headline inflation to accelerate modestly, it will remain comfortably within the bank's target band, allowing the bank room to continue easing. Renewed progress in Uganda's packed infrastructure pipeline will see strong import growth resume in 2017, after a number of project delays will see the current account narrow over 2016. Robust inflows of fixed investment will finance this deficit over the coming quarters.

Table Of Contents

Uganda Country Risk Report Q1 2017
Executive Summary 5
Core Views 5
Key Risks5
Chapter 1: Economic Outlook7
SWOT Analysis 7
BMI Economic Risk Index 7
Economic Growth Outlook 8
Improved Investment Will Drive Growth in 2017 8
Ugandan growth will speed up in 2017 from a tepid pace in 2016 This will be on the back of delayed investment projects finally
beginning construction, and an uptick in borrowing by businesses and consumers
GDP By Expenditure Outlook 9
TABLE: GDP GROWTH FORECASTS 9
TABLE: PRIVATE CONSUMPTION FORECASTS 9
TABLE: GOVERNMENT CONSUMPTION FORECASTS10
TABLE: FIXED INVESTMENT FORECASTS 10
TABLE: NET EXPORTS FORECASTS 10
Fiscal Policy And Public Debt Outlook11
Infrastructure Spending Will Drive Fiscal Deficit Wider 11
Uganda's fiscal deficit will widen slightly in fiscal year 2016/17 as spending on large scale public infrastructure projects ramps up
Although revenue growth will accelerate due to the introduction of a number of new taxes , this will not be sufficient to cover rising
expenditures
Structural Fiscal Position 12
TABLE: FISCAL AND PUBLIC DEBT FORECASTS 12
External Trade And Investment Outlook 13
Packed Project Pipeline Will Bolster Imports Following Delays 13
Renewed progress in Uganda's packed infrastructure pipeline will see strong import growth resume in 2017, after a number of project
delays will see the current account narrow over 2016 Robust inflows of fixed investment will finance this deficit over the coming
quarters
Outlook On External Position 14
TABLE: CURRENT ACCOUNT BALANCE FORECASTS15
Monetary Policy 16
Sluggish Growth Will Prompt Further Monetary Easing 16
The Bank of Uganda will continue to cut the policy rate in the coming quarters in an attempt to bolster slowing credit growth and boost
the economy While we expect headline inflation to accelerate modestly, it will remain comfortably within the bank's target band,
allowing the bank room to continue easing
Monetary Policy Framework 17
TABLE: MONETARY POLICY FORECASTS 17
Currency Forecast 18
UGX: Shilling's Slow Slide Will Continue 18
The Ugandan shilling will continue its path of slow depreciation in the coming quarters Foreign investment will be weak in the short term
due to project delays, whilst in the longer term, demand for dollars will pick up due to increased capital goods imports
TABLE: CURRENCY FORECAST 18
Contents
Chapter 2: 10-Year Forecast 21
The Ugandan Economy To 2025 21
A Decade Of Promise But Also Of Risk 21
We are forecasting robust real GDP growth averaging around 5 9 % over our 10-year forecast period as private consumption and
agricultural exports continue to grow, the country starts producing oil and electricity generation increases, which together have the
potential to stimulate non-agricultural sectors and reduce the country's energy import bill That said, the country will remain vulnerable to
energy shortages and adverse unpreventable climatic conditions, certainly in the short term
TABLE: LONG-TERM MACROECONOMIC FORECASTS 21
Chapter 3: Political Outlook 23
SWOT Analysis 23
BMI Political Risk Index23
Domestic Politics24
Growth Will Be Dented By South Sudan Spillover 24
Rising violence in South Sudan will have detrimental effects on Uganda in the coming quarters, weighing on trade and fiscal dynamics
as well as increasing the risk of social unrest Sizeable infrastructure investment and rising oil production will ensure Uganda's long-term
growth outlook remains bright, though continued fighting in South Sudan could offer at least modest economic headwinds
TABLE: POLITICAL OVERVIEW 24
Long-Term Political Outlook 26
Political Challenges For Museveni Ahead26
Uganda will face several challenges over the coming decade, including a presidential succession as well as the need to overcome
the legacy of civil war in the north and create jobs for its youthful population That said, we maintain a positive outlook on Uganda and
foresee a relatively successful resolution of these challenges
Chapter 4: Operational Risk 29
Operational Risk 29
TABLE: OPERATIONAL RISK 29
Business Crime 30
TABLE: BUSINESS RESPONSE TO RISK IN UGANDA 31
Government Intervention 33
TABLE: BUSINESS TAXES 33
TABLE: PERSONAL INCOME TAX 34
Chapter 5: BMI Global Macro Outlook37
Global Macro Outlook 37
Austerity Has Peaked, But Populism Is Not Yet Policy 37
TABLE: GLOBAL ASSUMPTIONS37
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % 38
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % 39
TABLE: MACROECONOMIC DATA and FORECASTS 41

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