GDP Growth Slows in Coffee Producer Uganda as Farm Output Stalls

  • Economy expanded 3.5% in first quarter, down from 5.4%
  • Agriculture accounts for a quarter of gross domestic product

Economic growth in Uganda slowed to 3.5 percent in the first three months of the year as agriculture and industrial output decelerated.

Expansion in Africa’s largest coffee exporter slowed from 5.4 percent a year earlier, the Uganda Bureau of Statistics said in a report on its website on Tuesday. Growth was also slower than the revised 5.7 percent in the fourth quarter of 2015.

Agriculture production, which accounts for about a quarter of gross domestic product in the East African nation, increased by 0.3 percent after expanding 1.8 percent a year ago. Industry, which includes manufacturing and mining, grew 2.6 percent, slower than the 9.7 percent it registered in the first three months of 2015.

“Agriculture had a bad quarter,” Mark Bohlund, Africa economist at Bloomberg Intelligence in London, said in an e-mailed response to questions. “This might carry into remaining quarters of the year as rainfall has been lower than expected in May to July.”

Uganda, which hopes to start pumping oil in four years, estimates its economy could expand by 5.5 percent in the year through June 2017, Finance Minister Matia Kasaija said last month. The central bank cut its benchmark rate by 100 basis points to 15 percent in June, saying slowing inflationary pressure gave it room to ease monetary policy.

Renewed fighting in South Sudan and a potential devaluation of the Democratic Republic of Congo’s franc could hit trade and agricultural exports, Bohlund said. Tax increases in this fiscal year will hurt consumer spending, he said.

Uganda held a presidential vote in February in which President Yoweri Museveni was re-elected, extending his three-decade rule by another five years.

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