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Uganda Country Risk Report Q2 2015

Uganda Country Risk Report Q2 2015

Core Views

Economic growth in Uganda is gathering momentum and we expectreal GDP growth to accelerate from an estimated 5.5% in 2014 to6.0% in 2015. This will be supported by a notable rise in governmentspending as investment in key infrastructure projects continues andby election-related spending in the run-up to the 2016 polls. The othermain driver of growth will be the consumer sector which continues togrow strongly and will benefit from a favourable outlook for inflation.

The 2016 general elections are already looming large over Uganda’spolitical landscape. At this stage there is little standing betweenPresident Yoweri Museveni and another term in office, or any signof a credible opposition challenge emerging to the ruling NationalResistance Movement (NRM)’s long-standing dominance. Even so,tensions within the party look set to remain elevated.

Despite a subdued outlook for inflation, currency considerations arelikely to be foremost in the minds of the Ugandan monetary authoritiesand this will dictate a wait-and-see approach to monetary policyover the coming months. The Ugandan shilling has been underheavy pressure of late and for this reason any imminent looseningof monetary conditions is unlikely.

Major Forecast Changes

No major forecast changes


Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Ruling Party Tensions To Rumble On
Ructions within the ruling party will require careful management by President Museveni over the coming months.
TABLE: Political Overview
Long-Term Political Outlook
Political Challenges For Museveni Ahead
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.
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Activity
GDP Rebasing Does Not Alter Positive Growth Outlook
Economic growth in Uganda will accelerate over the c oming quarters supported by rising public investment, lower oil prices and a
buoyant consumer sector. We forecast real GDP growth of 6.0% in 2015 and 6.0% in 2016.
TABLE: Economic Acti vit y
Balance Of Payments
Current Account Deficit Substantial But Manageable
Despite the falling cost of imported fuel, Uganda's current account will remain deep in the red throughout our 2015-2019 forecast period
owing to soaring import demand and an uninspiring outlook for exports.
TABLE: Current Account
Monetary Policy
Monetary Conditions To Remain Tight
The Bank of Uganda will likely keep a relatively firm grip on the monetary reins over the coming months. While we expect inflation to be
relatively contained in 2015, concerns over the currency will dictate a cautious approach to monetary policy.
TABLE: Monetar y Polic y
Fiscal Policy
Election Pressures Pose Risks To Spending In 2015
Uganda's fiscal deficit will widen slightly over the coming quarters given our expectation that government spending will rise ahead of
the February 2016 general elections. We expect the budget shortfall to increase from 5.9% of GDP in FY2013/14 to 6.1% of GDP in
FY2014/15.
TABLE: Fiscal Polic y
Chapter 3: 10-Year Forecast
The Ugandan Economy To 2024
A Decade Of Promise But Also Of Risk
We are forecasting robust real GDP growth averaging more than 6.2 % over our 10-year forecast period as private consumption and
agricultural exports continue to grow; t he 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.
TABLE: Long-Term Macr oec onomic Forecasts
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
TABLE: Operational Risk
Availability Of Labour
TABLE: Sub -Sahara n Africa - Availabilit y Of Lab our Ris k
TABLE: Source of Immigra nts in Uga nda ('000)
TABLE: Empl oyme nt By Sect or, '000
Crime Risk
TABLE: SSA - Crime Ris ks
TABLE: Crime Rates
Chapter 5: BMI Global Assumptions
Global Outlook
Weaker EMs To Weigh On Growth
Table : Global Assumpti ons
Table: Developed States, Real GDP GrowtH, %
Table : BMI VERSUS BLOO MBERG CON SENSUS REAL GDP GROWTH FORECASTS, %
Table : Emergi ng Mar kets , Real GDP Growt h, %

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