Stanchart lowers growth outlook

Standard Chartered Bank has revised Uganda’s economic growth downwards up from the projected 6.2 per cent.
The revision was informed by the uncertainty in the oil sector that has seen a delay in the announcement of key anchors such as Final Investment Decision and the date when Uganda is expected to produce first oil.
FID is a key stage that will open way for Uganda to begin producing oil.
In a briefing delivered through a webcast on Wednesday, Ms Razia Khan, the Standard Chartered Bank chief economist for Africa and the Middle East, said: “We have lowered our 2020 and 2021 growth forecasts to 6 per cent and 6.2 per cent.” Standard Chartered had projected Uganda to grow at 6.2 per cent and 6.5 per cent in 2020 and 2021, respectively.
Ms Khan also highlighted the continued challenge of low revenue collection, saying it will be difficult to achieve “sustained progress in revenue mobilisation, especially with elections approaching”.
She also noted that whereas the Central Bank is expected to continue administering an accommodative monetary policy, there could be changes as elections draw nearer.
Uganda is expected to hold its general election next year and experts have predicated, just like previous election, the 2021 polls might negatively impact economic growth.
“We expect Bank of Uganda to keep its policy rate on hold at 9 per cent throughout 2020, having previously seen scope for more easing. Given elections in 2021, and rising caution over the extent of government’s public financing requirement, we see the [Central Bank] adopting a tighter policy stance in 2021,” Ms Khan said.
Standard Charted also said, East African economies will, by extension, register reasonable growth in 2020 with Kenya’s economy expected to accelerate to 5.8 per cent while Tanzania is expected to post a high of 6.5 per cent.

Deficit expansion
In the same briefing, Ms Sarah Baynton-Glen, the Standard Chartered Bank economist for Africa, said following the easing of monetary policy between 2018 and 19, private-sector credit is starting to accelerate, having previously been in negative territory in 2017.
“The current account deficit will likely stay wide in 2020. While we have revised our 2019 deficit forecast to 4.2 per cent of GDP (previous 5.6 per cent). We see it expanding in 2020 to 4.5 per cent (5.5 per cent) of GDP due to higher imports. In 2019, the trade deficit increased on higher capital goods and oil imports,” she said.
Ms Baynton-Glen also noted that the deficit grew despite higher gold exports, which increased 26 per cent in the year ended September 2019.