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World Bank report indicates Uganda’s economy to grow at 6.0% in 2024

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A new World Bank report indicates that Uganda’s economy will grow at 6.0 percent in 2024, the second highest in the East African region.

According to the World Bank Global Economic Prospects, both Uganda and the Democratic Republic of Congo (DR Congo) will grow at the same rate of 6.0 percent in 2024 while Rwanda will be the fastest-growing economy in East Africa (7.6 percent) in 2024.

“In Uganda, an oil-related construction boom led to large inflows of foreign direct investment in the first quarter of 2024, supporting strong growth in the industrial sector. Increased global coffee and cocoa prices supported the agricultural sector of some economies (Côte d’Ivoire, Ethiopia, Uganda) in early 2024, although cocoa production has been disrupted by shifts in rainfall patterns and black pod disease, creating challenges for many producers (World Bank 2024w),” the report reads in part.

Tanzania’s economy will grow at 5.4 percent while Kenya is set to grow at a 5.0 percent rate. Burundi’s economy is projected to register a 3.8 percent growth with Somalia at 3.7 percent and South Sudan at 2.0 percent.

“The positive economic development in the region will lead to increased trade and improvement in people’s income arising from commodity products following the recovery Covid-19 pandemic, which affected the economic activities and people’s health at its peak in 2020, 2021, and 2022,” the report notes.

The World Bank said growth in Sub Saharan Africa (SSA) is projected to pick up from 3 percent in 2023 to 3.5 percent in 2024 and about 4 percent annually in 2025-26, as fading inflationary pressures allow for interest rate cuts, which will support private consumption and investment.

“Growth in the region’s largest three economies is expected to accelerate from 1.8 percent in 2023 to 2.4 percent in 2024 and an average of 2.6 percent in 2025-26. Yet, this is markedly below the region’s average growth,” said the World Bank.

However, SSA largest economies; Nigeria, South Africa and Angola were weak in 2023, holding back growth in the region. Growth in Nigeria is to bet at 3.3 percent, South Africa at 1.2 percent and Angola at 2.9 percent in 2024.

“In South Africa, growth weakened to 0.6 percent in 2023. Economic activity remained subdued in early 2024 as the economy continued to struggle with a broad-based deterioration in public service delivery, including electricity supply shortages, transport bottlenecks, and a high crime rate,” the report states.

“Non-resource-rich economies are forecast to maintain growth above their historical average rate, while resource-rich economies recover from their slow growth in 2023 that mainly reflected declining metal prices. Per capita GDP in SSA is expected to grow, on average, by a meager 1 percent this year and average 1.4 percent in 2025-26,” the World Bank explained.

The World Bank explains that risks to the outlook are tilted to the downside. Downside risks include increasing global geopolitical tensions, especially an escalation of the conflict in the Middle East; a further deterioration in regional political stability; increased frequency and intensity of adverse weather events.

The World Bank also pointed out that consumer price inflation could prove to be stickier than expected or pick up again driven, for example, by food price inflation caused by supply disruptions, possibly triggered by an escalation of the conflict in the Middle East.

“Furthermore, extreme weather events raise the likelihood of renewed upward pressure on food prices in affected economies. For instance, the current El Niño weather pattern has brought above average rainfall and flooding to east Africa, but severe drought to southern Africa. An increase in the frequency and severity of droughts or floods would exacerbate poverty across SSA and intensify food insecurity in many countries,” the World Bank said.

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