The Bank of Uganda (BoU) has said economic activity seems to be softening, something that could negatively affect the projected economic growth.
The economy is projected to grow at around 6-6.5% in 2019/20. However, BoU’s Composite Index of Economic Activity (CIEA) and other high frequency indicators of economic activity point to a slight moderation in real economic activity in the first quarter of 2019.
The remarks were made by Bank of Uganda Governor Prof. Emmanuel Tumusiime – Mutebile while issuing the Monetary Policy Statement for the month of April at BoU headquarters in Kampala.
The Central Bank maintained the Central Bank Rate (CBR), a benchmark lending rate for commercial banks at 10% with the aim of containing inflation within BoU’s target of 5% while supporting economic growth.
“…downside risks to the projected economic growth momentum have increased since the previous round of forecasts. The risks largely revolve around unresolved trade tensions, which are affecting global and domestic trade investment activities,” Mutebile said.
He added: “Elevated political and policy uncertainty in the global economy in an environment of limited policy space could weigh further on global growth and consequently on Uganda’s economic growth.”
In particular, Mutebile said, a combination of lower global growth, weather-related constraints to agricultural production, delays in implementing of public investment programmes and a weaker shilling could dampen Uganda’s economic growth.