The Bank of Uganda (BoU) Tuesday revealed that the economy is expected to grow by 6.0% in Financial Year 2018/19, up from the projected 5.8% in 2017/18. A year earlier the economy expanded by 3.9%.
Releasing the Monetary Policy Statement for June 2018, Prof. Emmanuel Mutebile, the Governor, BoU said Uganda’s economic activity continues to strengthen.
“Economic growth is estimated to have improved across all sectors; agricultural sector is estimated to have grown by 3.2%, supported by a more robust growth in both food and cash crops, while the industrial and service sectors are estimated to have grown by 6.2% and 7.3% respectively,” Mutebile said.
He added that medium term prospects remain favourable supported by multiplier effects of public infrastructure investments, improving agricultural productivity, an increase in private sector investment and household consumption and strengthening of the global economy.
He however said the contribution of net exports to GDP growth will be negative as a result of an acceleration in import-intensive components of domestic demand.
He added that the depreciation of the exchange rate and the increasing oil prices are the biggest downside risks to the global economy.
“The exchange rate has over the last three months come under pressure, driven by global strengthening of the US dollar and the weaker current account position due to increased demand for imports, which more than offset the growth in exports,” he said, adding: “In FY 2017/18, the current account deficit as a ratio of GDP is projected to increase to 5.3% from 3.4% in FY 2016/17.”
CBR Maintained at 9%
BoU maintained the Central Bank Rate (CBR), a benchmark lending rate for commercial banks at 9.0%, citing the rising inflationary pressures.
“Inflation is projected to rise faster than previously projected but remain within 5% target in the next 12 months,” he said.
Annual Headline Inflation declined slightly to 1.7% in May 2018 from 1.8% in April 2018, while Annual Core Inflation declined to 1.1% from 1.6% over the same period.