economy 29 May 2026 The Observer (Uganda)
Middle East Tensions Ripple Through Uganda's Economy, Experts Warn
Global economic instability stemming from conflicts in the Middle East, particularly disruptions around the Strait of Hormuz, is directly impacting Uganda's economy through rising fuel and fertilizer costs, affecting everyday citizens and key sectors like tea production. Source: https://observer.ug/news/iran-war-weakens-ugandas-economic-prospects
Escalating tensions in the Middle East are casting a long shadow over Uganda’s economic outlook, with experts warning of significant adverse effects on daily life and key industries.
Joseph Mawejje, a senior economist at the World Bank, explained during a recent Uganda Development Bank webinar that disruptions to vital global trade routes, such as the Strait of Hormuz, have tangible consequences for Uganda.
This critical waterway is a major conduit for global trade, handling substantial percentages of the world’s seaborne sulfur, oil, liquefied petroleum gas (LPG), and liquefied natural gas (LNG), as well as refined oil products, chemicals, and metals. Mawejje highlighted that any instability in this region can severely disrupt global supply chains.
“The Strait of Hormuz functions as a critical choke point of the global economy,” Mawejje stated. “Any interruption of commodity exports from the Gulf region does not stay confined to energy markets; it transmits into fertilizer availability, fuel prices, and the cost of industrial inputs that ultimately influence production costs and food systems.”
Ugandans are already experiencing these ripple effects, particularly through increased fuel prices. A liter of petrol now costs between Shs 6,000 and Shs 6,300, with diesel ranging from Shs 6,200 to Shs 6,500.
Dr. Francis Mwesigye, Chief Economist at Uganda Development Bank, echoed these concerns, emphasizing the interconnectedness of the global economy. “Whatever happens in one part of the world can significantly affect another,” he noted.
Dr. Mwesigye pointed to the tea sector as a prime example of how global disruptions can impact local production. Given Uganda’s reliance on imported fertilizers from the Gulf region, shifts in global supply chains directly influence the cost and availability of crucial agricultural inputs, affecting the sector’s already struggling competitiveness.
These economic pressures, exacerbated by distant conflicts, underscore Uganda’s vulnerability to global market volatility. The findings were discussed at a webinar organized by the Uganda Development Bank.