Uganda’s economy continues to post positive indicators

KAMPALA, Uganda—Uganda economy has continued to show positive indicators in the economic activity, this is revealed by the monthly performance of economy report for the month of January.

High frequency indicators of economic activity remained positive. The Composite Index of Economic Activity (CIEA) improved by 0.62 percent to 210.34 in December 2017 from 209.04 in November 2017, indicating a rise in the level of economic activity.

This rise was partly explained by increased exports earnings, imports and growth in credit extension to the private sector which stimulated production, consumption and consequently translated to increase economic activities.

The BTI remained above the threshold of 50 despite declining to 57.8 in January 2018 from 58.8 in December 2017, which is an indication of positive sentiments on doing business.

 In the real sector, the downward trend in annual inflation continued during the month. Annual headline inflation declined to 3 percent from 3.3 percent recorded in December 2017. The drop was largely attributed to a slow-down in the pace of increase in general prices of energy, fuel, utilities and for goods and services in the core basket.
High frequency indicators of economic activity remained positive. This gives an indication of an increasing level of economic activity and positive sentiments on doing business going forward by the private sector.

In the financial sector, the gradual recovery in credit extension to the private sector continued during December 2017, supported by easing monetary policy.

Private sector grew by 2 percent during the month to Shs 12,825 billion, as compared to a growth of 0.1 percent the month before.

The shilling was faced with mild depreciation pressures resulting in 0.5 percent loss in value against the US dollar during the month. The average inter-bank mid- rate was recorded at Shs 3,640.1/US$ as compared to US$ 3,623.3/$ the previous month.

In-spite of the oversubscriptions, interest rates on the government securities slightly edged upwards across all tenors compared to November 2017 levels. The weighted average interest rate on the 91-day and 364-day TBs were recorded at 8.6 percent and 9.1 percent, respectively as compared to 8.4 percent and 9.0 percent the previous month.

In the external sector, the merchandise  trade deficit increased by 6.6 percent to  US$ 254.5 million in December 2017 from US$ 238.8 million in November 2017,  on account of a stronger increase in the value of merchandise imports (4.2 percent)  which was higher than the increase in export earnings.

In the fiscal sector, fiscal operations during January 2018 resulted into a lower than projected overall deficit, on account of an underperformance of the development expenditures. In addition, shortfalls in tax revenues affected collections on overall revenues and grants.