Bank of Uganda monetary statement for the month of June show that economic activities in Uganda continue to strengthen from 3.9% that was registered in the financial year 2016/2017 to 5.8% that has been recorded in the financial year 2017/2018
While releasing the statement governor Bank of Uganda Prof. Emmanuel Tumusiime Mutebile, attributed the growth in the economy to the stable growth of the agricultural sector at 3.2% supported by a robust growth of food and cash crop supply.
Mutebile noted that the season has been very supportive to farmer’s ad it’s the reason of the economic transformation.
“Apart from the growth of the agricultural sector, even the industrial and service sectors was estimated to have grown by 6.2% and 7.3%” Prof Emmanuel Tumusiime Mutebile said.
However, the governor expressed fears of a downside risk to the micro- economy which include the exchange rate depreciation coupled with increasing fuel prices.
He says that the exchange rate for the last three months has been under pressure driven by global strengthening of the US dollar and weakening the shillings.
“The downward trend in inflation experienced during the course of FY 2017/2018 will gradually be reversed with import prices rising reflecting a combination of a gradual increase in global inflation weakening the shilling,“ noted Prof.Emmanuel Tumusiime Mutebile.
On the weakening shilling, the Director Research BOU Adam Mugume expressed concern for the reduction in workers remittance from Ugandans working abroad road from $1.1 billion over $917 million which represents a drop of $ 150 million in a space of 3 months.
Mugume added that , “We are yet to find out what the problem is and which countries specifically but I’m sure conditions aren’t all that good.”
As the bank assesses a risk of upward inflation, the central bank has maintained the central bank rate at 9% as they continue to monitor the economy.