22.05.2026
Uganda’s economy remained resilient in 2025, supported by strong private consumption, manufacturing, construction and services. Growth is expected to accelerate in 2026–2027, especially as oil production begins to support exports and fiscal revenues. Inflation remains below the Bank of Uganda’s medium-term target, although higher food, fuel, fertilizer and transport costs could create renewed pressure. Fiscal risks have intensified because of pre-election spending, rising interest costs and reliance on costly domestic borrowing. The external position remains under pressure from oil-project-related imports, but should improve once oil exports start contributing more strongly.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 6.3 | 6.8 | 8.5 |
| Inflation (%, yoy) | 3.7 | 3.9 | 4.2 |
| International poverty rate ($3.00, 2021 PPP, %) | 51.5 | 49.6 | 48.5 |
| Fiscal balance (% of GDP) | -6.0 | -6.5 | -5.3 |
| Gross public debt (% of GDP) | 52.4 | 54.5 | 53.4 |
| Current account balance (% of GDP) | -5.9 | -7.2 | -3.7 |
Growth accelerates ahead of oil production
Uganda’s real GDP growth reached 6.3% in 2025, supported by strong private consumption, manufacturing, construction and services. Industrial and services activity remained robust, while agriculture was weaker due to lower rainfall. High-frequency indicators in early 2026 pointed to continued private-sector expansion.
Growth is projected to rise to 6.8% in 2026 and 8.5% in 2027, helped by large investment projects and the expected ramp-up of oil production. Petroleum-related investment, refining and export infrastructure should support industry and exports. However, the start of oil production is not a substitute for broader reforms, especially in agriculture, human capital and private-sector development.
Inflation remains contained
Inflation remained low in 2025, averaging 3.7%, while headline and core inflation stayed below the Bank of Uganda’s 5% target in the second half of the year. Prudent monetary policy and exchange-rate stability helped contain price pressures, although food inflation increased as agricultural conditions weakened.
Inflation is projected to remain moderate, at 3.9% in 2026 and 4.2% in 2027. Upside risks come from higher oil, fertilizer and transport prices, especially if global energy-market disruptions persist. Exchange-rate pressures and food-price shocks could also affect poorer households and smallholder farmers.
Fiscal pressures intensify
The fiscal deficit widened to 6.0% of GDP in 2025 and is projected to increase further to 6.5% in 2026. Pre-election spending, supplementary budgets, frontloaded expenditure and rising interest costs have intensified fiscal pressures. Domestic revenue mobilisation remains low, while reliance on domestic financing has pushed debt service above one-third of revenues.
Public debt is projected to rise from 52.4% of GDP in 2025 to 54.5% in 2026, before easing slightly to 53.4% in 2027. Debt remains at moderate risk of distress, but costly domestic borrowing and limited concessional financing are important vulnerabilities. Returning to fiscal consolidation will require expenditure rationalisation and stronger implementation of the Domestic Revenue Mobilisation Strategy.
External balance remains pressured by oil-project imports
The current account deficit narrowed to 5.9% of GDP in 2025, helped by stronger exports and portfolio inflows, while foreign-exchange reserves increased. However, the deficit is projected to widen again to 7.2% in 2026 because of oil-project-related imports, petroleum refining investment and higher global import costs.
The external position is expected to improve in 2027 as oil exports begin to rise, reducing the current account deficit to 3.7% of GDP. However, delays in oil production, higher energy prices, weaker capital inflows or exchange-rate pressures could worsen the outlook. Maintaining adequate reserves and avoiding excessive fiscal slippage will be important for external stability.
Overall outlook
Uganda’s outlook is positive, with growth expected to accelerate in 2026–2027 as oil production starts and investment remains strong. Inflation should remain contained, but fiscal and external vulnerabilities are rising before oil revenues fully materialise. The main policy challenge is to avoid fiscal slippage while protecting human-capital and infrastructure spending. Long-term progress will depend on using oil revenues prudently, strengthening domestic revenue mobilisation, improving agricultural productivity, creating better jobs and accelerating economic transformation beyond low-productivity sectors.
Sources:
World Bank, Uganda Macro Poverty Outlook, April 2026.
World Bank, Uganda Economic Update, 2025.
International Monetary Fund, Uganda: Post-Financing Assessment Discussions, February 2026.
International Monetary Fund, World Economic Outlook, April 2026.
Bank of Uganda, Monetary Policy Statement, 2026.
