Global Growth to Bounce Back to 2008 levels
The World Bank forecasts global economic growth to edge up to 3.1 percent in 2018 after a much stronger-than-expected 2017.
The Bank in its January 2018 Global Economic Prospects attributes the strong growth to recovery in investment, manufacturing, and trade continues, and as commodity-exporting developing economies benefit from firming commodity prices.
The Bank, however, warns that the growth is largely seen as a short-term upswing because over the longer term, slowing potential growth - a measure of how fast an economy can expand when labor and capital are fully employed - puts at risk gains in improving living standards and reducing poverty around the world.
Growth in advanced economies is expected to moderate slightly to 2.2 percent in 2018, as central banks gradually remove their post-crisis accommodation and as an upturn in investment levels off. Growth in emerging market and developing economies, like Uganda, as a whole is projected to strengthen to 4.5 percent in 2018, as activity in commodity exporters continues to recover.
Commenting on the report, World Bank Group President Jim Young Kim said "This is a great opportunity to invest in human and physical capital. If policy makers around the world focus on these key investments, they can increase their countries' productivity, boost workforce participation, and move closer to the goals of ending extreme poverty and boosting shared prosperity."
According to the World Bank, 2018 is on track to be the first year since the financial crisis in 2008 that the global economy will be operating at or near full capacity.
The Bank says with slack in the economy expected to dissipate, policymakers will need to look beyond monetary and fiscal policy tools to stimulate short-term growth and consider initiatives more likely to boost long-term potential.
Growth in Sub-Saharan Africa, which includes Uganda, is anticipated to pick up to 3.2 percent in 2018 from 2.4 percent in 2017. Stronger growth will depend on a firming of commodity prices and implementation of reforms.
The report says a drop in commodity prices, steeper-than-anticipated global interest rate increases, and inadequate efforts to ameliorate debt dynamics could set back economic growth.
The Bank in its economic outlook for Uganda projects a growth rate of five percent or over, up from the 3.9 percent registered in 2017.
The World Bank, the government and other institutions like the International Monetary Fund project Uganda's 2018 growth at five percent.
Uganda's economy has grown at a slower pace in recent years, reducing its impact on poverty. Average annual growth was 4.5 percent in the five years to 2015/16, compared to the seven percent achieved during the 1990s and early 2000s.
The economic slowdown was mainly driven by adverse weather, unrest in South Sudan, private sector credit constraints, and the poor execution of public sector projects.
The World Bank says Uganda's economy may recover to above five percent in 2017/18, and to six percent in 2018/19, if weather conditions improve, Foreign Direct Investment (FDI) inflows accelerate, the banking system stabilizes, and budgeted, capital spending is executed without delays.