Uganda To Grow At Slower Pace Of 6.3% This Year: IMF

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The Ugandan economy is weathering the impact of the global financial crisis better than expected, the International Monetary Fund said in a report Wednesday.

The lender said economic activity remained strong by both regional and international standards, with growth touching 7.1% in 2008. However, it expects the growth to slow down to 6.3% this year, before rebounding to its potential of 7% in the following years.

"The regional drought, while devastating for some of Uganda's neighbors, has boosted Ugandan exports of food, thus offsetting some weakness in external demand for traditional exports such as coffee", the IMF noted.

The lender said there were still downside risks to the outlook, largely related to the uncertain prospects of the global economy, as well as the regional security situation.

"The decline in core inflation is evidence that the BOU's monetary policy framework is appropriate. The main challenge for monetary policy will be to prevent the high levels of food price inflation from spilling over to underlying, core, inflation," the IMF said.

Meanwhile, the lender said it supports the July 2009-June 2010 fiscal year budget on infrastructure investment to promote future growth, while consolidating and expanding the gains of poverty reduction efforts of recent years.

(Market News Provided by RTTNews)