Uganda’s economy recorded robust growth in the final quarter of 2025, expanding by 8.5% year-on-year, driven by strong consumer demand and increased activity in key sectors including construction, according to official data released by the government.
The performance marks a significant acceleration from the 5.4% growth recorded in the same period a year earlier, underscoring improving economic momentum in the East African nation.
The Ministry of Finance said the expansion was supported by resilient household consumption and heightened investment, particularly in infrastructure and building projects. Analysts say the construction sector has been a key pillar of growth as Uganda ramps up major development initiatives, including oil-related infrastructure.
One of the most notable projects is the East African Crude Oil Pipeline (EACOP), a $5 billion venture that will transport crude oil from western Uganda to Tanzania’s port of Tanga. Authorities report that the pipeline is now about 80% complete, signaling progress toward Uganda’s long-awaited entry into commercial oil production.
Commercial oil production is expected to begin in the second half of 2026, a milestone that could significantly reshape the country’s economic trajectory. The oil fields are being developed by international energy firms including France’s TotalEnergies and China’s CNOOC.
The government projects that oil exports could generate approximately 2.2 trillion Ugandan shillings (about $587 million) in revenues in the 2026/27 financial year, providing a major boost to public finances and foreign exchange earnings.
Beyond oil, broader economic indicators also point to strengthening fundamentals. Recent data shows improved business activity across agriculture, manufacturing, and services, supported by rising exports and increased private sector confidence. Inflation has remained relatively subdued, helped by improved food supply and stable macroeconomic conditions.
Uganda’s export sector has also rebounded strongly, with shipments of commodities such as gold and coffee driving a sharp increase in earnings and helping to turn a previous trade deficit into a surplus.
Despite the positive outlook, challenges remain. The government has recently revised its overall growth forecast for the upcoming fiscal year to between 6.5% and 7%, reflecting global uncertainties and fiscal adjustments. However, medium-term projections remain optimistic, with growth expected to strengthen further as oil production begins and infrastructure investments continue.
Economists note that sustaining this growth momentum will depend on effective management of oil revenues, continued investment in productive sectors, and maintaining macroeconomic stability.
With strong quarterly growth and transformative energy projects nearing completion, Uganda appears to be entering a pivotal phase in its economic development, with the potential for accelerated expansion in the years ahead.
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