Uganda’s economy is expected to grow by about eight percent in the medium term, supported by rising public investment, oil and gas developments, and a gradual strengthening of private sector activity, Bank of Uganda revealed.
Presenting the February Monetary Policy Statement in Kampala on Monday, BoU Governor Michael Atingi-Ego said the growth outlook reflects increased government spending on major infrastructure projects, ongoing preparations in the oil and gas sector, and the impact of economic support programmes aimed at stimulating production and investment.
He said improving global economic conditions, alongside careful management of interest rates and financial sector stability, are also expected to play a key role in supporting stronger growth over the coming years.
“Overall prospects for growth remain favourable, supported by infrastructure and oil-related investments, as well as a recovery in private sector activity,” Atingi-Ego said, while cautioning that the outlook remains exposed to external shocks.
He noted that risks to the growth projection are tilted to the downside, largely due to evolving geopolitical tensions that could slow global economic activity, disrupt trade routes and supply chains, and push up commodity prices, particularly oil. Such developments, he said, could affect both domestic production costs and consumer prices.
“These risks are largely global in nature,” Atingi-Ego said, adding that on the upside, stronger-than-expected investment in the extractive sector, easing trade tensions and a more robust global recovery could lift economic growth above current projections.
Against this uncertain global backdrop, the central bank maintained the Central Bank Rate at 9.75 percent, where it has remained unchanged for the past 14 months. Atingi-Ego said the decision was intended to preserve macroeconomic stability, keep inflation under control and support sustained economic expansion.
“Without compromising the primary objective of price stability, the current policy stance also supports smoothing economic fluctuations and fostering socio-economic transformation,” he said, noting that future policy adjustments will depend on incoming economic data and developments in the global economy.
Uganda’s economy grew by an average of 6.3 percent during the first three quarters of 2025, largely driven by increased government expenditure and resilient household consumption. Government spending rose sharply, while household demand remained strong despite tighter financial conditions.
Although economic growth moderated slightly by September 2025, recent high-frequency indicators suggest a pickup in activity toward the end of the year. Looking ahead, the economy is projected to expand by between 6.5 and 7 percent in the 2025/26 financial year.
The central bank also revised its inflation outlook slightly downward, citing a stronger shilling and easing international oil and food prices. Inflation is expected to remain slightly below the medium-term target in 2026, within a range of 3.8 to 4.3 percent, before stabilising thereafter.
Atingi-Ego said the inflation outlook is underpinned by prudent monetary policy, exchange rate stability and moderating global commodity prices, although risks remain from strong domestic demand pressures, exchange rate volatility, global conflicts and adverse weather conditions that could affect food supply.
On the global front, the International Monetary Fund projects world economic growth of 3.3 percent in 2026 and 3.2 percent in 2027, supported by investment in technology, accommodative financial conditions and private sector resilience.
Growth in sub-Saharan Africa is expected to rise from 4.4 percent in 2025 to 4.6 percent in 2026 and 2027, reflecting macroeconomic stabilisation and reform efforts in several key economies.
