Strong performance in agriculture, industry, and services keeps Uganda among East Africa’s top economies

Uganda’s economy grew by 6.3% in the financial year ending June 2025, marking an improvement from 6.1% recorded the previous year. The growth reflects steady expansion across major sectors and places the country among the stronger performers in East Africa.

The figures point to a stable macroeconomic environment, with controlled inflation and sustained domestic demand supporting economic activity.

Agriculture Remains Central to Growth

Agriculture played a major role in driving growth, expanding by about 6.6%. Strong output in key crops such as coffee and cocoa supported both exports and rural incomes.

The sector continues to employ a large share of the population and contributes a significant portion to national output. Government programs like the Parish Development Model and Emyooga have focused on improving productivity and increasing household earnings through commercial farming.

Higher agricultural output has also supported agro processing industries, strengthening links between farming and manufacturing.

Industry Gains from Construction Boom

The industrial sector grew by around 7.0%, with construction emerging as a key driver. Activity in infrastructure projects, including roads and energy developments, boosted demand and created opportunities across related industries.

Manufacturing also benefited from increased agricultural production, particularly in processing and value addition. These gains have helped reduce production costs in some areas while supporting job creation.

Services Sector Maintains Momentum

The services sector, which contributes the largest share to GDP, recorded steady growth. Trade, real estate, tourism, and financial services all showed positive performance during the period.

Tourism continued its recovery, bringing in higher earnings, while increased household and government spending supported retail and service activity across the economy.

Exports and Investment Support Expansion

Export performance improved, led by coffee, gold re exports, cocoa, and tourism services. This helped narrow the current account deficit and strengthen foreign exchange reserves.

Investment also played a role, particularly in construction and equipment. Government spending increased during the period, adding momentum to economic activity.

At the same time, inflation remained within the target range set by the Bank of Uganda, helping maintain stability and confidence in the economy.

Uganda Within the East African Growth Trend

Uganda’s performance aligns with a broader growth pattern across East Africa, one of the fastest growing regions on the continent. Countries such as Ethiopia, Rwanda, and Tanzania have also recorded strong growth rates, supported by infrastructure investment, expanding trade, and rising domestic demand.

Regional integration through the East African Community continues to support trade and economic cooperation.

Oil Sector Expected to Boost Future Growth

Economic projections for the next financial year suggest growth could rise to between 6.5% and 7.0%. The expected start of commercial oil production in the Albertine Graben is likely to play a major role in this outlook.

Projects such as the East African Crude Oil Pipeline are expected to attract investment, increase government revenues over time, and stimulate activity in construction and logistics.

Oil production could push growth higher in the coming years if managed effectively.

Challenges Remain Despite Strong Performance

Uganda still faces several risks that could affect future growth. Climate shocks such as drought and flooding continue to threaten agricultural output. Fiscal pressures have also increased, with higher government spending widening the budget deficit.

Structural challenges remain, including rapid population growth, limited industrial depth, and the need to create more jobs for young people entering the workforce.

External factors such as global commodity price changes and geopolitical tensions also pose risks to stability.

Outlook Points to Continued Expansion

Uganda’s recent growth highlights resilience and steady progress across key sectors. Continued investment in agriculture, infrastructure, and value addition will be important in sustaining this momentum.

The expected start of oil production presents a major opportunity, but long term success will depend on careful management, economic diversification, and policies that support job creation and inclusive growth.

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