Syndicate content

The Impact of the Global Economic Slowdown on Uganda

Charlotte Lundgren's picture

Uganda has in the past few years showed impressive growth rates despite a number of shocks including prolonged drought, severe energy shortage and the adverse impact of high oil and food prices. Public finances are in good shape with a very favorable debt situation and the financial sector is sound and well-capitalized. Uganda is, therefore, entering the global economic slowdown in a relatively strong position.

The first effects of the global financial crisis are already being felt on the currency and stock markets; both had been falling sharply but have now stabilized. The main transmission channels from the global economic crisis to the Ugandan economy are expected to be receding demand for Ugandan exports, reversing terms of trade and slackened capital inflows. All in all, the assessment is that the global economic slowdown will have noticeable but manageable effects on the Ugandan economy. In our new ‘global economic slowdown’-scenario for Uganda, we have revised growth downwards to average 6.9% (7.9%) during 2008/09-2010/11.

In terms of policy implications, there is room for prudent widening of the fiscal deficit. It should therefore be possible to accommodate spending as planned, including much-needed infrastructure investments. This will also serve as a much needed fiscal stimulus to the economy. Given the increasing concerns about domestic factors keeping inflation above target, the room for monetary relief is very limited.

Comments

Submitted by BradJ on
It would be nice to have America in such a strong economic position as Uganda. Many Americans are running around like never before in this generation scrounging for money and ways to pay their gigantic debt load down. Americans wallow in more debt than their grandparents would have ever allowed their grand kids to accumulate. Grandparents who lived through the Great Depression would really be sad if they had a current personal balance sheet on each of their grand children. Debt loads are so high I am ready to hear how Uganda is doing so well. http://personalmoneystore.com/#Worldwide–Economic-Crisis

The economic slowdown (which is far more severe than the term indicates) is not only affecting Uganda's ability to trade and sustain economic growth but is also having an adverse effect on development interventions run by INGOs. The issue of sustainability of development projects is raised in the blogpost below but to my mind, the problem now is only exacerbated by the recession. http://www.guardian.co.uk/society/katineblog/2009/mar/24/project-sustainability

The ILO has recently conducted a rapid assessment of the impact of the economic crisis on employment in Uganda. Our findings confirm that the trade shock is relatively moderate, but nevertheless there has been a strong impact on workers through a decline in real wages. This is driven by food inflation and stagnation of nominal wages. Poor workers have been affected the most because of the high share of their income spent on food and low bargaining power. The full report, launched in Kampala in December 09, is available online: http://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/instructionalmaterial/wcms_118218.pdf

Submitted by Andrea Mercedes on
The economical development of a poor country ain't easy. It's hard to enhance the trading especially when traders know that the country might not provide the same value expected. But even though, Uganda is slowly crawling it's way towards a better economic status. The link below may provide more ideas on how to make oneself bring his success in a higher level: http://www.millionairemindvideo.com

Submitted by Sharlene Stills on
That's an astonishing start to a down hill economy. It won't be easy to dig there way out of that, but it's not easy for wealthier countries either. You have to consider the amount of debt everyone is in. It's not an uncommon thing to see a country in dept by a few billion dollars. This amount of debt is likely to destroy the global economy, especially since gas prices are about to sore to $4 a gallon!

Add new comment