Country Report Uganda March 2010

Outlook for 2010-11: Economic growth

The economy showed resilience in 2009 and will continue to expand at a reasonable rate, relying on the industrial and services sectors. The performance of the agricultural sector, which accounts for a declining proportion of GDP but employs over 70% of the labour force, will largely depend on weather conditions. Construction activity will be strong, driven by donor-funded and privately financed building projects. The energy sector will attract unprecedented amounts of investment to Uganda, and an oil refinery and pipeline to the Kenyan coast now appear likely. Oil production will begin at modest levels in late 2010 but it will be another few years before the country is producing at targeted levels of around 150,000 barrels/day. Electricity shortages will be less frequent as expensive temporary thermal power is used to cover shortfalls, and the 250-mw Bujagali hydroelectric dam is expected to come on stream during the forecast period. We therefore forecast economic growth of 7% in 2010, rising to 8% in 2011 as foreign investment and regional demand pick up.

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