Uganda’s economic growth could accelerate to 6.5% in 2014 from a projected 5% this year, boosted by macroeconomic stability and increased public investments, the World Bank said on Tuesday. The east African country, which has crude reserves in its west estimated at 3.5 billion barrels, has been spending vast sums of money on a raft of infrastructure projects including roads, bridges and hydropower dams ahead of commencement of crude production in 2016. In a report on the economy, the World Bank urged the country to diversify its economic production and process more of its raw produce locally to be able to absorb the growing number of unemployed youth.
Headline inflation, which hit an 18-year high of above 30% at the end of 2011, has since dropped to hover around the central bank’s medium-term target of 5%. In July, the central bank revised its forecast for the country’s economic growth in the 2013/14 (July-June) fiscal year to 6%, from an initial forecast of 5.1%. The World Bank said Uganda has the potential to become a middle-income economy by 2040 “if the government can ensure economic stability to support the implementation of long-term fiscal and structural policies”. The labour force was growing at above 4% annually, the World Bank said, adding that Uganda would likely add about 10 million potential workers into the labour market by 2020.