Kampala — The International Monetary Fund has downgraded Uganda's 2011/12 growth by one percentage point to 4 per cent, saying the crisis in the Eurozone is likely to slow progress of the economy.
This is the first time in more than 5 years that the IMF has projected Uganda's growth below 5 per cent. The downgraded growth is an indication that Uganda's economy has this time round been weakened by both external and domestic factors.
Speaking in an interview, Mr Thomas Richardson, the IMF resident representative, told Daily Monitor: "Growth in Uganda will slowdown in 2011/12 than earlier projected mainly due to the weaker global economy."
Late last year Bank of Uganda revised the country's growth to 5 per cent down from a 6.7 per cent. Uganda, in 2011 endured some of its worst economic indicators exacerbated by high inflation, high interest rates, scarcity of key commodities and power shortages among others.
Mr Richardson said: "There's a lot of uncertainty about what will happen in Europe but given the current baseline forecast for the Eurozone, we think growth in Uganda will be between 4 and 5 per cent." According to Mr Richardson, the slowdown in the Eurozone will be felt through reduced demand for exports and tourism.
Reacting to the matter, Dr Adam Mugume, the Bank of Uganda director for research said economic activity is slowing down but not necessarily stagnated," adding that the country's widening current account requires financing through increases in exchange inflows.