Uganda`s merchandise trade deficit narrowed both on a monthly and annual basis, according to the latest Performance of the Economy Report for the month of August, released by the Ministry of Finance.
The comparison shows that the trade deficit narrowed by 37.3 percent to US$ 98.4 million in July 2017 when compared to June figures. The lower deficit is attributed to US$65.2 million reduction in the value of merchandise imports, compared to US$ 6.8 million value of exports.
Compared to the same period last year, the trade deficit decreased by 31.4 percent due to a higher increase in exports that offset the increase in the import bill, the report that tracks the monthly performs of the Ugandan economy says.
The report shows that Uganda’s export earnings in July dropped by 2.4 percent compared with June 2017 following declines in commodities like coffee, fish and its products, gold, beans, cotton and tea. The report mainly attributes the decline in exports to the fall in their volumes while the fall in gold is due to the drop in the price on the world market.
On an annual basis, export receipts grew to US$270.87 million in July 2017 from US$ 222.54 million in July 2016. The report attributes the improved performance mainly to the export value of coffee and beans by 82.9 percent and 224.1 percent, respectively.
The value of coffee exports improved following an increase in both the volume and price by 59.1 percent and 15 percent, respectively, the report adds. Further, the increase in the volume of coffee is on account of newly planted coffee that has started.
Destination of exports
The report shows that the East African Community remained the major destination for Uganda’s exports, followed by the Rest of Africa, and the European Union. A comparison between July 2016 and July 2017 shows that exports to the EAC increased by US$ 26.18 million, with Kenya recording the largest increase. However, exports to Rwanda and Tanzania fell by 8.1 percent and 76.4 percent respectively.
During the month of July 2017 merchandise imports amounted to US$ 369.29 million, a 15 percent decrease compared with June 2017. This came on account of a decrease in government and non-oil formal private sector imports by 51.5 percent and 12.2 percent respectively.
However, the report shows that oil imports grew by 0.6 percent. The report attributes the decrease in non-oil private sector imports to a fall in the import volumes, while the increase in oil imports is due to an increase in the prices. Compared to the same period the previous year, merchandise imports grew by 0.9 percent, driven by an increase in oil imports which is attributed to an increase in both the price and volume of oil imports.
Origin of Uganda’s imports
The report shows that in July 2017, Asia was the largest source of imports, contributing 37.5 percent of the total imports. Middle East and EAC contributed 21.6 percent and 15.4 percent respectively, making them the second and third largest sources.
Imports from Asia were mainly from China (39.9 percent), India (26.2 percent) and Japan (14.3 percent). Kenya and Tanzania contributed of 69.9 percent and 21.4 percent of the total imports from EAC respectively.