Uganda Economic Outlook

• In 2011 the economy experienced a perceptible slowdown but real Gross Domestic Product (GDP) growth is projected to improve in 2012 and 2013.
• The surge in consumer prices, infrastructure constraints and socio-political factors remain concerns affecting growth.
• Youth unemployment was estimated at 4.3%, higher than for the labour force as a whole, at 3.8%.

Real GDP growth is expected to improve in 2012, mainly because of good prospects in the oil sector. But this will depend on the ability of the authorities to address major constraints arising from infrastructure problems, particularly in the energy sector, and  to mitigate various risk factors, including those linked to climate change. Inflationary pressures are forecast to drop progressively in 2012 and in 2013, reflecting both global falls in food and fuel prices and the impact of monetary tightening by the Bank of Uganda. The government is expected to rein in expenditure growth, but lower revenue collections brought about by the slowdown in economic activity are likely to offset any improvements in the fiscal balance. On the external front, the current account deficit is projected to deteriorate in 2012 and 2013 as import growth accelerates and exports arehit by the global economic slowdown.

Uganda has one of the youngest and fastest growing populations on the African continent and thus faces the associated challenge of providing jobs of good quality to its young people. In 2009/10, it was estimated that there were 5.9 million young people between the ages of 15 and 24, or 19.3% of the population. On a strict definition, youth unemployment was estimated at 4.3%, higher than for the labour force as a whole, at 3.8%. Youth unemployment and underemployment trends in Uganda arise from a variety of factors, including the lack of employable skills, limited access to financial and technical resources, the insufficiently vocation-oriented nature of the education system, and a mismatch between skills and requirements in the jobs market.