The Central Bank expects the economy to grow between 5 and 5.5 percent in the financial year 2017/18, up from the 3.9 percent attained in the previous year.
Releasing the Monetary Policy Statement for August 2017 in Kampala today, the BOU Governor Emmanuel Tumusiime-Mutebile said that economic activity gathered momentum in the first half of 2017 and was expected to improve further based on the current accommodative monetary policy, recovery in external demand and foreign director investment (FDI).
Prof. Tumusiime-Mutebile added that the improved activity in the agriculture sector due to improved weather conditions and the fiscal stimulus outlined in the current national budget would also help push the economy forward.
He maintained the Central Bank Rate (CBR) at 10 percent, saying the economic activity was picking up while inflation which currently stands at 5.7 percent remained on target, having dropped from 6.4 percent in June.
“Given the fact that inflation is expected to remain around the medium-term target and that economic activity is picking up, with output approaching potential … the BOU will therefore leave CBR unchanged,” Prof. Tumusiime-Mutebile said, adding that both core and headline inflation figures were projected to be between 5 and 7 percent by the end of the year.
The Governor also said Uganda’s current account position had improved in 2016/17, with the deficit a percentage of GDP declining to 2.8 percent from 5 percent in 2015/16, supported by an 18 percent rise in export earnings compared with the previous year.
Further, the Governor said the increase in exports earned the country USD3.17 billion in the financial year 2016/17 as it exported products like coffee, flowers and sugar. This, he said improved Uganda’s account position of USD3.5 billion and Adam Mugume, the Executive Director Research at the Central Bank said the cash can cover five and a half months of imports.