Uncertainty looms over Uganda’s economic growth due to COVID-19

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Restrictive measures against the second wave of COVID-19 infections have impacted the country’s economic growth prospects, The Bank of Uganda said Thursday.
The economy contracted by 1.1% in the previous year but is expected to grow by 3.5-3.8% in this year, a lower projection compared to August’s projection

Prof. Emmanuel Tumusiime Mutebile the governor Bank of Uganda noted that the lockdown measures have interrupted the recovery trend in the third quarter and lowered the projected economic growth for the financial year 2021/22 to 3.5-3.8 percent compared to the projections in August of 3.5-4.0 percent, adding the virus continues to cause uncertainty for the near-term economic outlook.
However, he is positive that the country will achieve a 5.5-6.0% economy growth rate in the 2022/2023 financial year peaking at 6.5-7.5% in the next half of the financial year.

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“The outlook remains overcast by the future path of the pandemic, especially a major mutation of the virus that could severely undermine vaccine effectiveness and delay both domestic and global economic recovery,”
High frequency indicators of economic activity in August and September suggest that the economy is pulling out of the impact of the second wave of the pandemic
A rebound in economic activity will be sustained by an acceleration in private consumption, strong growth in external demand, a gradual return of tourism, and foreign and domestic private investment in the oil sector, Central Bank noted.

Meanwhile, The central bank held its bench mark lending rate at all-time low to help in business recovery after an economic slowdown caused by COVID-19.
“The Bank of Uganda , at the Monetary Policy Committee meeting of October 2021, decided to maintain the Central Bank Rate at 6.5 percent” the Bank said in a statement.

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