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Uganda Country Risk Report Q2 2016

  • February 2016
  • -
  • Business Monitor International
  • -
  • 37 pages

Core Views

The Ugandan economy will feel the effects of the heavy currencydepreciation that took place in 2015 via higher borrowing costs andelevated inflation, particularly through H116, despite an improvedoutlook for the currency.An ambitious infrastructure spending programme and a failure torein in recurrent spending will, despite improvement in revenuecollection, see Uganda's fiscal balance remain deep in the red overthe coming years.We believe that the aggressive monetary tightening cycle that beganin April 2015 has reached a peak. Barring a significant intensificationof pressures on the currency through early 2016, we expectmonetary conditions to be loosened from mid-2016 onwards.

Table Of Contents

Uganda Country Risk Report Q2 2016
Executive Summary 5
Core Views5
Key Risks5
Chapter 1: Economic Outlook 7
SWOT Analysis 7
BMI Economic Risk Index 7
Economic Growth Outlook 8
Growth Constrained By Tight Monetary Conditions8
Despite an improved outlook for the currency, the Ugandan economy will, particularly through H116, feel the effects of the heavy
depreciation that took place in 2015 via higher borrowing costs and elevated inflation
GDP By Expenditure Outlook 9
TABLE: GDP GROWTH FORECASTS9
TABLE: PRIVATE CONSUMPTION FORECASTS 9
TABLE: GOVERNMENT CONSUMPTION FORECASTS9
TABLE: FIXED INVESTMENT FORECASTS10
TABLE: NET EXPORTS FORECASTS10
Monetary Policy 11
Monetary Loosening To Commence In Q31611
We believe that the aggressive monetary tightening cycle that began in April 2015 has reached a peak Barring a significant
intensification of pressures on the currency through early 2016, we expect monetary conditions to be loosened from mid-2016 onwards
Monetary Policy Framework 12
Fiscal And Debt Outlook 13
Planned Spending Cuts Will Not Improve Fiscal Health13
A lack of a credible plan to rein in recurrent spending and stalled public financial reform efforts will preclude any meaningful fiscal
consolidation in Uganda over the medium term
Structural Fiscal Position 13
TABLE: MAIN REVENUE and EXPENDITURE CATEGORIES14
Currency Forecast 14
UGX: Slower Pace Of Depreciation In 201614
The Ugandan shilling will undergo a more gradual pace of depreciation in 2016 and 2017 than in 2015 due to a relatively weaker dollar
That said, given large external and fiscal imbalances, we see little scope for any meaningful appreciation over the medium term
TABLE: BMI CURRENCY FORECAST15
Chapter 2: 10-Year Forecast 17
The Ugandan Economy To 2025 17
A Decade Of Promise But Also Of Risk17
We are forecasting robust real GDP growth averaging more than 65% 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 FORECASTS17
Chapter 3: Political Outlook 19
SWOT Analysis 19
BMI Political Risk Index 19
Domestic Politics 20
Tensions To Rise As Polls Approach20
With massive advantages of incumbency, a weak opposition and a change-averse electorate, President Yoweri Museveni is hot
favourite to land another term in office in February's presidential election That said, we believe it will be a tenser and more contested
affair than recent polls, with an increased risk of violence
TABLE: POLITICAL OVERVIEW 20
Long-Term Political Outlook 21
Political Challenges For Museveni Ahead21
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 25
SWOT Analysis 25
Operational Risk Index 25
Operational Risk 26
TABLE: OPERATIONAL RISK26
Trade Procedures And Governance 27
TABLE: DOCUMENTS REQUIRED FOR IMPORT AND EXPORT27
TABLE: TRADE PROCEDURES27
TABLE: SUB-SAHARAN AFRICA - TRADE PROCEDURES AND GOVERNANCE RISK 28
Vulnerability To Crime 30
Chapter 5: BMI Global Macro Outlook 33
Global Macro Outlook 33
Downside Risks Gather Momentum33
TABLE: GLOBAL ASSUMPTIONS33
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %34
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, % 34
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %35
TABLE: MACROECONOMIC DATA and FORECASTS37

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