Uganda’s economy registered notable improvements in February 2025, with the Shilling appreciating against the US Dollar, business conditions improving, and the country’s trade deficit narrowing, according to the latest Performance of the Economy Report.
The Shilling gained by 0.3% on average against the US Dollar, trading at a midrate of Shs3,677.7. This appreciation was attributed to increased foreign exchange inflows, particularly from portfolio investors, which outweighed corporate demand for the dollar.
Despite a slight rise in headline inflation to 3.7% from 3.6% in January, the rate remained within target levels, indicating price stability.
The Purchasing Managers’ Index (PMI), a key measure of private sector activity, rose to 52.6 in February from 49.5 in January, signaling an improvement in business conditions.
Similarly, the Business Tendency Index (BTI) climbed to 59.49 from 58.27, reflecting growing confidence among private sector players in Uganda’s economic outlook.
On the trade front, Uganda’s merchandise trade deficit narrowed significantly, dropping by 24.4% from $318.90 million in December 2024 to $241.25 million in January 2025.
This was primarily due to a sharp increase in exports, which outpaced the rise in imports.
Uganda’s export earnings surged to $859.22 million in January 2025, marking a 16.6 percent increase from $736.81 million in December 2024.
The growth was driven by higher earnings from mineral products, coffee, electricity, tobacco, cotton, tea, flowers, and maize, among other commodities.
Notably, coffee exports recorded a 36.1% surge in earnings, rising from $115.03 million to $156.50 million in January 2025.
This was mainly attributed to an increase in export volumes. Italy remained the top market for Uganda’s coffee, accounting for 36.9 percent of total exports.