Uganda: Economy on track to attain 6.5% in 2013

(Bloomberg) – Uganda’s economy is on course to expand in 2013-14 at the higher end of its forecast range, driven by growth in the services industry and investment in construction, energy and natural resources.

According to a report from the World Bank, gross domestic product (GDP) will probably rise by 6.5 percent in the year through June from the 5 percent growth attained a year earlier.

“The economy is progressively recovering, driven by renewed macroeconomic stability, export policies, increased access to credit and low inflation,” according to the statement. According to officials, the country is in the process of investing heavily in the development of agriculture infrastructure – which should in the medium to long term continue to bring down the cost of doing business in the country and the East African region as a whole.

Monetary policy easing by the central bank (Bank of Uganda) has increased the flow of credit to private investors, helping an economic recovery in the East African nation gain steam. The central bank’s benchmark interest rate, which stands at 11 percent, has been lowered from a record 23 percent since the start of last year.

The country is emerging from “years” of unstable growth after a lack of controls over public expenditure delayed investment.

Production of oil, discovered in Uganda in 2006 by Tullow Oil Plc, is expected to start in 2018. Tullow Oil, China National Offshore Oil Corp. and France’s Total SA are developing crude finds estimated at 3.5 billion barrels.