The Bank of
Uganda has revised its growth projections for this financial year. BOU says
that all high-frequency indicators available show that the momentum of economic
activity for the quarter to July 2021, subsided.
sector was expected to grow much faster when Entebbe International Airports and
tourist sites reopened. However, this was affected by the second lockdown
even if international tourism were allowed to move to and from their
19 restrictive measures that remain in place will continue to weigh on the
economic activity, with economic growth projected in the range of 3.5-4.0
percent in the financial year 2021/2022. In particular, between Covid 19 stops
and starts, tourism is unlikely to return to normal levels any time soon,” says
Governor Emmanuel Tumusiime-Mutebile.
wave lockdown that lasted for 54 days saw more places closed, in addition to
others like entertainment and recreation as well as bars, that have remained
closed for 17 months, and the start-stop measures in the education
The BoU Executive
Director for Research, Adam Mugume says that for now, the economic growth is
expected to be slower by 0.5% unless the pandemic worsens in the short
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Central Bank hopes that if vaccination picks up in the latter part of the year
and movement restrictions are eased, this will allow for gradual economic
growth recovery, but that the impact of the pandemic especially on the private
sector could linger on for the next two years.
It is this
uncertainly that made the Monetary Policy Committee maintain the Central Bank
Rate at a low 6.5%, to further encourage financial institutions to reduce the
cost of borrowing by the private sector to spur growth.
bank lending rates have remained at a high average of 23 percent despite banks
announcing the fall in their base lending rates to as low as 16.5 percent.
expected to pick up in subsequent years and could grow by between 6 and 7
percent in 2024/2025.
also depend on external factors like global markets improving which would mean
exports picking up, as well as growth in tourism, investments in the oil sector
and general improvement in the business confidence.
uncertainties continue to surround the economic outlook. The outlook continues
to be highly conditional on the containment of the spread of the pandemic which
will be premised on the vaccination rates and the extent to which SOPs are
observed. The emergency of vaccine-resistant variants would, however, prompt
the reintroduction of restrictions of gatherings and mobility, which will
derail the economic recovery,” says Mutebile.
economic activity is also expected to keep inflation low because of low. This
indicates an output gap because even the demand low production levels cannot be
outstripped by demand, which is also low.
says that some sectors have seen price increases, especially in the transport
sector, while weather effects on food-crop output will also impact on