Global unrest triggered by escalating tensions in the Middle East could unsettle financial markets, but Stanbic analysts say it may also create opportunities for disciplined investors willing to take a long-term view.
That was the key message from analysts and investment advisers during a webinar hosted by SBG Securities Uganda.
Grace Semakula, the chief executive officer of SBG Securities Uganda Limited, urged investors not to panic during periods of geopolitical uncertainty.
“Such times can come with a lot of uncertainty. But these are not times to panic. They are times to take a patient, long-term view and consistently allocate funds,” Semakula said.
He said global disruptions often create moments for investors to reposition their portfolios and identify emerging opportunities, provided they focus on long-term economic fundamentals rather than short-term market movements.
Economists say Uganda is entering this uncertain period from a relatively strong economic position. Inflation has remained subdued, economic growth has been resilient, and exports, particularly gold and coffee, have expanded significantly over the past year.
However, analysts warn that a prolonged conflict in the Middle East could still affect Uganda’s economy.
Christopher Legilisho, an economist at Standard Bank Group, said the global economy could slow if the conflict drags on.
“We might see a protracted conflict,” Legilisho said. “That could weigh on global growth and create spillovers to different countries, including Uganda.”
Central banks had been preparing to ease monetary policy as inflation pressures began to decline in 2024 and early 2025.
However, rising geopolitical tensions have increased the possibility of higher oil prices and renewed inflationary pressure.
“Because of the conflict, we are starting to see expectations that inflationary pressures could return,” Legilisho said. “Central banks may become more cautious or preventative in their policy stance.”
In Uganda, the Bank of Uganda has maintained the Central Bank Rate at 9.75 percent since October 2024. Analysts say the bank could delay interest rate cuts or even tighten monetary policy if inflation rises.
Uganda’s strong trade ties with the Middle East also expose the country to potential disruptions. Gold is now Uganda’s largest export earner, with the country exporting about $6 billion worth of the mineral annually. Roughly $5.2 billion of those exports are destined for the United Arab Emirates.
Legilisho warned that disruptions along that route could temporarily affect exporters.
“If producers are unable to ship gold to the UAE, refiners and exporters may struggle to find immediate alternative markets,” he said.
However, the disruption could also accelerate domestic policy initiatives. The central bank has been preparing to launch a domestic gold purchase programme aimed at strengthening Uganda’s foreign exchange reserves.
Energy markets present another potential challenge. Uganda still relies heavily on imported refined petroleum products, much of which originates from the Middle East. Rising oil prices could therefore increase the country’s import bill.
“You could see Uganda’s oil import requirements rise significantly if prices spike,” Legilisho said.
However, the long-term outlook could improve once Uganda begins commercial oil production later this year.
Financial markets have already started reacting to the global tensions. The Ugandan shilling has weakened by about three percent since the conflict escalated, and analysts warn that inflation could rise further if global energy prices continue to increase.
In a worst-case scenario, Legilisho estimates inflation could rise to about 8.3 percent. Such an increase could prompt the central bank to raise interest rates, which would slow credit growth and potentially dampen economic expansion.
Remittances may also be affected. Uganda receives significant inflows from citizens working in the Middle East, and any regional instability could disrupt those earnings.
The extent of the economic impact will largely depend on how long the conflict lasts.
“If the crisis is resolved within a month, the economic impact would likely be limited,” Legilisho said.
Investment advisers say the key is for investors to manage volatility rather than fear it.
“Even through crisis, there are significant opportunities to explore. Our role as an investment partner is to help clients see beyond the immediate noise and make informed, long-term decisions,” Semakula said.
