Global economic growth to boost remittance inflows

World Bank senior country economist Rachael K. Sebudde

What you need to know:

  • Important. High export earnings, increased private capital remittances and foreign direct investment play a critical role in Uganda’s economy.

Kampala.

The World Bank Group is optimistic that the rise in both global and sub-Saharan Africa Gross Domestic Product (GDP) growth rate will result into high export earnings, increase in private capital remittances and foreign direct investment in Uganda.
High export earnings, increased private capital remittances and foreign direct investment play a critical role in Uganda’s economy inform of high economic growth, stable exchange rate and increased domestic investment in the economy.
Giving a recap shortly after the presentation of Africa’s Pulse report in Washington DC recently, the World Bank senior country economist Rachael K. Sebudde said: “The rise in the global and the regional economic growth has positive impact on Uganda’s economy inform of increased earnings from commodity exports, increased capital remittances and foreign direct investment which all play a great role in Uganda’s economy,” she said.
She said last year, Foreign Direct Investment Inflows to Uganda drastically reduced to $500 million (Shs1.814 trillion) making it one of the lowest levels the country has received in recent years.
“Remittances to Uganda last was $1 billion (about Shs3.629 trillion) this time around we expect capital remittances to increase as this will help lift economic in Uganda that has been slow,” she said.
Ms Sebudde said Uganda earnings from commodity exports has also been low due to low global growth and low commodity prices.
At the release of the report, the Bank said external conditions are more favourable, with a stronger trend in global growth, robust growth in global goods trade, rising energy and metals prices, and supportive global financing conditions.
It further explained that higher commodity prices are helping to narrow current account deficits in the region, especially of oil exporters. International bond and equity inflows in the region are rising, helping to finance the current account deficits and cushion foreign reserves.
The report says the current picture shows that economic growth in sub-Saharan Africa is recovering at a modest pace, and is projected to pick up to 2.4 per cent in 2017 from 1.3 per cent in 2016.

Increase in economic activity
Looking ahead, the Bank says Sub-Saharan Africa is projected to see a moderate increase in economic activity, with growth rising to 3.2 per cent in 2018 and 3.5 per cent in 2019 as commodity prices firm and domestic demand gradually gains ground, helped by slowing inflation and monetary policy easing.
The Africa’s Pulse report states that this rebound is led by the region’s largest economies. In the second quarter of this year, Nigeria pulled out of a five-quarter recession and South Africa emerged from two consecutive quarters of negative growth.
However, the report warns that the pace of the recovery remains sluggish and will be insufficient to lift per capita income in 2017.