The Global Economic Prospects Report predicts that Uganda will not escape the slowdown in global growth that has been steepened by Russia’s invasion of Ukraine and its effects on commodity markets, supply chains, inflation, and financial conditions have steepened.
Aieral view of Kampala City. GDP growth is expected to drop according to the Global Outlook report of the World Bank
Uganda and some of its neighbours will have
a hard time as a new World Bank report warns of a possibility
of high global inflation accompanied by tepid growth, reminiscent of the
stagflation of the 1970s.
The Global Economic Prospects
Report predicts that Uganda will not escape the slowdown in global growth that has been steepened by Russia’s invasion of Ukraine and
its effects on commodity markets, supply chains, inflation, and financial
conditions have steepened.
war in Ukraine has disrupted the global cereals trade and worsened food shortages. Yet, still, Uganda
and its neighbours; The Democratic Republic of Congo, Madagascar, and Rwanda—which
rely heavily on wheat imports from Russia and Ukraine are expected to
experience persistently elevated food inflation.
number of Ugandans have recently complained about the increasing prices of wheat.
Opposition politician, Robert Kyagulanyi this week called on President Museveni
to bring down the prices by reducing taxes on imports.
But the World Bank flagship report says that in addition to the adverse impact of
surging living costs, the growth outlook for low incomes countries like Uganda is
anticipated to be further weakened by the global economic slowdown.
According to the report, such stagflation could eventually result in a sharp tightening of
monetary policy in advanced economies, which could lead to financial stress in
some emerging markets and developing economies. It suggests that “a forceful and wide-ranging”
policy response is required to boost growth, bolster macroeconomic frameworks,
reduce financial vulnerabilities, and support vulnerable groups.
growth in low-income countries (LICs) is forecast at only 4.1 per cent in 2022
and 5.3 per cent in 2023 – 0.8 and 0.6 percentage points below the January
and others, according to the report have experienced planting delays because of
“In some LICs, higher prices of grains are expected to limit the
ability of farmers, especially those dependent on subsistence agriculture, to purchase
enough seeds for the new planting season and feed for livestock, “ says the
report. It also finds that the war in Ukraine has also markedly disrupted global fertilizer
supply, with Russia the world’s largest fertilizer exporter.
“Higher prices of fertilizers
and fuels are expected to weigh heavily on farming output as well,” warns the report
“ Fiscal policy, already constrained by high public debt and tightening global
financial conditions, have become even less accommodative.”
researchers find that spending pressures to curb the impact of rising prices
have been building in many countries (for example, fuel subsidies in Cameroon,
Kenya, and Nigeria; a fuel levy reduction in South Africa), further straining fiscal
“Moreover, rising core inflation in several
countries Cameroon, Nigeria, and Uganda points to broadening price pressures,
further reducing room for accommodative policies. Growth
in Sub-Saharan Africa is projected to decelerate from 4.2 per cent in 2021 to
3.7 per cent in 2022, as high inflation and policy tightening weaken domestic demand."
to the report, a growth deceleration in major trading partners is compounding
these headwinds. “Growth
is projected to firm slightly to an average of 3.9 per cent in 2023-24, assuming
further progress with pandemic containment measures”