Uganda’s real gross domestic product (GDP) growth in 2020 is projected to be between 0.4 and 1.7% compared to 5.6% in 2019, according to the latest edition of the Uganda Economic Update released by the World Bank.
The report, “Digital Solutions In A Time of Crisis” shows the economy has suffered from the triple shocks of the COVID-19 related economic and social disruption, a locust invasion and floods. Up to three million Ugandans could fall into poverty due to economic hardship and a lack of alternative means of survival.
The pandemic is expected to hit tourism, exports, and remittances, a report released on Wednesday said. It is also likely to damage investments in the country where long-awaited oil production could commence by 2022.
“Tourism revenues are estimated to halve in FY20 to about US$540 million compared to pre-COVID-19 estimates of US$1.1 billion. This slowdown will translate into significant job losses, with tourism jobs having tripled over the last decade to more than 600,000. Job losses in this sector will have significant spillover effects on private consumption,” the report said.
Remittances which totaled US$1.4 billion in FY19, equivalent to 4 percent of GDP are also expected to fall significantly.
Exports are also expected to decline due to shrinking global demand, restrictions on trade and supply chain disruptions, and a slow uptick as the global economy recovers.
Due to a sharp drop in tax revenues, Government has also been forced to borrow much more to continue providing services to Ugandans.
The economic update makes several recommendations for the economy and ICT sector, including implementing supportive policies and regulation, review of taxation in the digital economy, leveraging technology to support the health sector and economic recovery through increased digitalization of agribusiness and manufacturing, expansion of social safety nets, and transparency and accountability of government’s response to COVID-19. It also recommends the development of a coherent strategy of ecosystem support and catalyzing regional and global integration of Uganda’s digital economy.
“There are areas of the economy that have shown resilience in the current crisis and by leveraging digital technologies are inventing new ways of operating and doing business,” said Richard Walker, World Bank Senior Economist for Uganda.