Uganda’s economy continues to exhibit strong resilience and growth, according to the May 2025 Performance of the Economy Report, released by the Ministry of Finance, Planning, and Economic Development.
The report outlines key developments across the real, financial, external, and fiscal sectors, offering a comprehensive overview of the country’s economic direction.
Uganda’s economy expanded to Shs226,344 billion in the financial year 2024/25, recording a real GDP growth rate of 6.3 percent, up from 6.1 percent in 2023/24. This growth was largely driven by rising aggregate demand, increased investment, and a significant boost in exports. Government initiatives aimed at fostering private sector development also played a pivotal role.
All three major sectors of the economy [agriculture, industry, and services] recorded growth, with agriculture leading at 6.6 percent, according to the report. Business confidence remained high, as reflected in the Business Tendency Index [BTI], which stood at 59.02 in May 2025. “This reflects optimistic sentiment among private sector players, particularly in agriculture and wholesale trade, driven by strong demand and increased order volumes,” the report noted.
Headline inflation rose to 3.8 percent in May 2025, up from 3.5 percent in April, while core inflation increased to 4.2 percent, driven by rising prices of key consumer staples such as beef, maize flour, and matooke [cooking bananas]. However, the report indicates that Energy, Fuel, and Utilities [EFU] inflation recorded deflation of -0.9 percent, reflecting falling fuel prices, which helped to moderate broader inflationary pressures.
The Ugandan Shilling appreciated by 0.4 percent against the US Dollar in May 2025, supported by strong inflows from coffee exports, remittances, and portfolio investments.
Lending rates on Shilling-denominated credit fell to 16.64 percent in April, particularly benefiting low-risk corporate borrowers. Meanwhile, private sector credit rose by 0.8 percent, reaching Shs26,380.26 billion. “Increased lending was noted in the agriculture, manufacturing, and transport sectors, underlining their growing significance to the economy,” the report stated.
The report highlights a substantial year-on-year increase in Uganda’s export earnings, which rose by 72.1 percent to reach $1,110.05 million in April 2025. Coffee exports stood out, increasing by 153.1 percent, owing to higher global prices and increased volumes. The Middle East remained Uganda’s top export destination, accounting for 35.7 percent of total exports, followed by the East African Community [EAC] at 24.4 percent.
Despite a 30.4 percent rise in imports, Uganda’s trade deficit narrowed significantly—from USD 303.91 million in April 2024 to $126.85 million in April 2025—thanks to robust export growth.
Government fiscal operations in May 2025 resulted in a deficit of Shs3,148.80 billion, exceeding the planned figure of Shs2,372.09 billion. “While tax revenue targets were achieved, non-tax revenues and external grants underperformed,” the report noted. “Expenditures exceeded projections, primarily due to increased grants to local governments and development initiatives supported by the World Bank.”
Within the EAC region, Uganda’s annual inflation in May matched Kenya’s at 3.8 percent. The Ugandan Shilling, according to the report, appreciated against the US Dollar, contrasting with weakening trends in several neighbouring currencies. Uganda’s trade deficit with EAC partner states narrowed to $127.05 million, supported by increased regional exports.
Overall, the report concludes that Uganda’s economic outlook remains positive, characterised by solid GDP growth, expanding export earnings, and a stable financial sector. However, it cautions that persistent fiscal challenges and inflationary pressures require careful and sustained government management to ensure continued growth.
“The private sector, particularly in agriculture, manufacturing, and trade, is well-positioned to capitalise on improved access to credit and buoyant market conditions. Increased lending to these sectors has been a key driver of recent economic momentum, offering a solid foundation for future growth,” the report states.
