During October 2018, economic activity is seen to have improved as indicated by the high frequency indicators of economic activity, according to the latest performance of the economy report published by the Ministry of Finance, Planning and Economic Development (MFPED).
According to the report, the composite indicator of economic activity (ciea) increased by 0.9 per cent in the month compared to a 0.8 per cent improvement in August 2018. The business tendency index (BTI) and Purchasing Managers Index (PMI) were above the 50.0 threshold at 56.7 and 56.6 in October 2018, up from 56.5 and 54.2 respectively in the previous month.
The report shows that annual headline inflation declined to 3.0 per cent in October 2018, from 3.7 per cent recorded in September 2018, largely on account of a deceleration in food crops and related items inflation. Food crops and related items inflation dropped due to lower prices of fruits as a result of increased supply. Annual Core and annual Energy, Fuels and Utilities (EFU) inflation also declined to 3.5 per cent and 6.9 percent in October, 2018 from 3.9 per cent and 10.1 per cent in September 2018, respectively.
On the other hand, The Ugandan Shilling appreciated by 0.6 per cent against the US dollar; recording an average midrate of Shs3,777.98/US$ in October 2018, compared to an average midrate of Shs3,800.68/US$ in September 2018. This was on account of higher supply of the US dollar due to increased inflows to NGO’s, coffee export receipts and offshore players.
According to the report, the stock of total outstanding private sector credit continued to expand in September 2018, recording a growth of 2.5 per cent compared to the previous month. Total stock of PSC in September was Shs13.89 billion which was higher by Shs338.68 billion compared to August 2018, due to pick up in economic activity.
By sector, the largest holders of private sector credit stock were: building, mortgage, construction & real estate; and trade- each of which accounted for 20 per cent share of outstanding private sector credit. The other sectors with big shares are personal and household loans (18 per cent), agriculture and manufacturing each with 13 per cent shares.
Meanwhile, Interest rates on treasury bills edged upwards across all tenors. The average weighted yields to maturity for October were 11.5 per cent, 13 per cent and 13.7 per cent for the 91, 182 and 364 day tenors higher than 10 per cent, 11.9 per cent and 12.3 per cent respectively in September 2018.
Uganda`s merchandise trade deficit narrowed both compared to the previous month and the same month in 2017, owing to simultaneous reduction in value of imports and increase in export receipts, says the report.
The merchandise trade deficit improved to US$162.3 million in September 2018 from US$202.8 million registered in August 2018.