Uganda’s economy holds firm through a challenging 2025

Kampala — Uganda’s economy closed 2025 on a broadly positive note, marked by steady growth, contained inflation and improving macroeconomic stability despite a challenging global environment. Government data and independent economic assessments point to a year in which resilience, rather than rapid expansion, defined economic performance.

Economic growth in 2025 remained robust by regional standards, supported by agriculture, services and industry. Provisional figures indicate that the economy expanded at a rate of around six percent, with momentum building toward the end of the year. The performance reinforced Uganda’s position among the faster-growing economies in the East African Community.

“The story of 2025 is one of stability and recovery,” said Ramathan Ggoobi, the Permanent Secretary and Secretary to the Treasury. “We have seen growth supported by agriculture, services and targeted public investment, even as global conditions remained uncertain.”

Agriculture continued to anchor the economy, benefiting from improved weather conditions, rising commercialisation and stronger export demand. Coffee and gold remained Uganda’s top foreign exchange earners, supporting rural incomes and cushioning the balance of payments. The services sector also posted strong gains, driven by trade, transport, ICT and financial services.

According to economist Fred Muhumuza, the diversification of growth sources helped strengthen economic resilience. “Uganda is no longer relying on one sector to drive growth. Agriculture, services and industry all made meaningful contributions in 2025, which reduces vulnerability to shocks,” he said.

Inflation remained firmly under control throughout the year, staying within the Bank of Uganda’s medium-term target. Headline inflation averaged below four percent for much of 2025, supported by a stable exchange rate, easing food prices and cautious monetary policy. This provided relief to households and helped stabilise business operating costs.

“The low and stable inflation environment was critical,” said Bank of Uganda Executive Director for Research, Adam Mugume. “It preserved purchasing power and allowed businesses to plan, invest and expand without the uncertainty of volatile prices.”

On the fiscal front, government continued to balance growth-supporting expenditure with consolidation efforts. While revenue collections improved, they remained below ambitious targets, keeping pressure on budget execution. Public debt sustainability and domestic revenue mobilisation remained central policy concerns.

Manufacturing and industry showed mixed performance. Construction and agro-processing expanded, but manufacturers continued to face high financing costs and infrastructure constraints. Business leaders repeatedly called for cheaper credit and stronger support for value-addition industries.

“Manufacturing growth is happening, but it is slower than potential,” said economist and policy analyst Ezra Suruma. “If Uganda is to accelerate transformation, access to affordable capital and industrial inputs must improve.”

Externally, Uganda’s economy benefited from improved foreign exchange inflows and a relatively stable currency. The Ugandan shilling appreciated modestly against the US dollar over the year, easing import costs and helping contain inflation. This contrasted with continued currency pressures in parts of the region.

Looking ahead, economists remain cautiously optimistic. Growth prospects for 2026 are anchored on continued recovery in private investment, export expansion and progress on strategic projects, including oil and gas developments.

“Uganda has laid a solid macroeconomic foundation,” said Ggoobi. “The focus now is translating stability into faster job creation, higher productivity and inclusive growth.”

As 2025 draws to a close, Uganda’s economic performance reflects a year of consolidation rather than dramatic change — one in which stability, resilience and gradual progress shaped the country’s economic trajectory heading into the new year.