KAMPALA – Uganda’s economy expanded by 5.8 per cent in the third quarter of the 2025/26 financial year, according to the latest Gross Domestic Product (GDP) figures released by the Uganda Bureau of Statistics (UBOS). On the surface, that sounds like straightforward good news. The economy is bigger than it was a year ago, businesses are producing more goods and services, and key sectors continue to grow.
But beneath the headline figure lies a deeper story, one that reveals both momentum and emerging pressures in different parts of the economy.
GDP is often described as the size of an economy. In practical terms, it measures the total value of goods and services produced within a country. When GDP grows, it generally signals increased economic activity. Yet growth rarely happens evenly across all sectors, and that is what the latest data shows.
The strongest contribution continues to come from services, which remain the backbone of Uganda’s economy. Activities such as trade, transport, communications, financial services and repairs accounted for 43.5 per cent of GDP during the quarter, making services by far the largest driver of economic activity. The sector grew by 5.9 per cent compared to the same period last year, supported largely by trade and repair services.
For ordinary Ugandans, this matters because services employ millions of people, from shopkeepers and transport operators to bankers and telecom workers. Continued growth suggests that consumer and business activity remains relatively resilient despite economic uncertainties.
Agriculture also delivered a strong performance, growing by 2.1 per cent year-on-year. More importantly, cash crop production accelerated sharply, growing by 7.2 per cent. UBOS attributes much of this performance to coffee production, which continues to be one of Uganda’s most important export earners.
That growth is significant because agriculture remains the primary source of income for a large share of Ugandan households. Stronger agricultural output often translates into higher rural incomes, improved export earnings and greater foreign exchange inflows.
Industry, meanwhile, posted growth of 5.9 per cent. Manufacturing expanded by 4.8 per cent, supported by increased production of pharmaceuticals and edible oils and fats. Construction also grew by 7.2 per cent, signalling continued investment in buildings and infrastructure.
Yet the report also reveals an important contradiction.
While the economy grew strongly compared to the same period last year, activity slowed when measured against the previous quarter. After adjusting for seasonal fluctuations, GDP increased by only 1.2 per cent between the second and third quarters of the financial year, down from 3.6 percent growth recorded in the preceding quarter.
That slowdown is visible across several sectors.
Agriculture contracted by 1.3 per cent compared to the previous quarter as food crop production declined. Industrial activity fell by 2.3 per cent, driven by weaker manufacturing and mining performance. Only services maintained momentum, growing by 4 per cent over the quarter.
For policymakers, this distinction is important. Year-on-year growth tells the story of where the economy stands compared to a year ago. Quarter-on-quarter figures reveal what is happening right now. The latest data suggests Uganda is still expanding, but some engines of growth are beginning to cool.
Perhaps the most striking signal comes from household spending.
Final consumption expenditure, which reflects spending by households and government, declined by 1.5 per cent in real terms compared to the same quarter last year. Household consumption itself fell by 3.1 per cent.
This may help explain why many Ugandans still feel financially strained despite positive economic headlines. An economy can grow while households reduce spending if growth is concentrated in specific sectors, regions or industries rather than broadly distributed across consumers.
Investment, however, remained relatively strong. Gross fixed capital formation, a measure of spending on buildings, infrastructure and productive assets, grew by 6.3 per cent year-on-year. That suggests businesses and institutions continue investing in future growth even as consumer spending softens.
Another noteworthy development was the 14.1 per cent increase in taxes on products and subsidies, which UBOS says was largely driven by higher import duties. While this boosts government revenue, it can also influence the cost of imported goods and business inputs.
The broader message from the latest GDP figures is neither a boom nor a slowdown. Rather, it is an economy moving forward, but unevenly.
Coffee exports, manufacturing activity, construction and services continue to provide momentum. At the same time, softer household spending and slower quarter-to-quarter growth suggest that many families and businesses are still navigating economic pressures beneath the positive national statistics.
The challenge for policymakers now is ensuring that economic growth translates into wider improvements in household incomes, purchasing power and living standards. Because for most Ugandans, the real measure of economic success is not what happens in GDP reports—it is whether life becomes more affordable, jobs become more secure and opportunities become more accessible.
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