There is a concern is that developed economies are tightening their monetary policies and this could lead to tightening financial conditions in developing countries including Uganda.
economic uncertainties due to covid 19 are highly projected to continue into
2022 as the pandemic starts its third year.
among other factors, will have negative effects on the Ugandan economy next
year, according to the analysis by the Bank of Uganda.
economies have been recovering, though not in a stable trend, neither is growth
expected to be uniform, with the imbalances resulting from differences in
vaccination levels and policy mix.
generally global growth is expected to continue, it will be slowed down by the
Omicron variant worsening the supply chain disruptions and depressing demand.
the BOU Monetary Policy Report, higher global growth is good for Uganda since
her export markets will demand more of her commodities and services.
But the slowdown in China and the possibility of lockdowns and
border closures on account of omicron virus strain could have an impact on
fear that the recovery of the global markets will lead to higher global prices
which could push domestic inflation up as Uganda imports more than it exports.
concern is that developed economies are tightening their monetary policies and
this could lead to tightening financial conditions in developing countries
Uganda's economy grew faster in 2021 compared to 2020, as most sectors were
more open, and the private sector is more hopeful for 2022 due to the expected
full reopening of the economy as promised by the president.
evident through the increased lending to 19 percent for the quarter ending
October 2021 from an average 17.61 percent in the quarter ending July 2021,
following the expiry of the Credit Relief Measures.
economic activity picked up on easing of the lockdown measures, lending to the
Private Sector also increased in the quarter ending October 2021, with the
value of loans approved rising to 2.76 trillion shillings from 2.18 trillion in
the quarter ending July 2021.
Total private sector credit thus grew by 9.2 percent in the same quarter
relative to a 7.9 percent growth in the quarter ending July 2021.
Manufacturing, Real Estate, and Personal loans were the main drivers of private
sector credit growth, while growth was slower for Agriculture, Trade, and
This shows that
there was a higher revival of activity in the manufacturing and real estate
generally, the effects of the second lockdown led to weaker growth in economic
activity in the three-month period to October, while over the whole year to October
30, the growth rate was 4.4% according to the Central Bank.
the IHS Markit Purchasing Managers’ Index, private sector activity declined to
54.1 in November 2021 from 54.6 in October 2021. This still shows a
positive trend since the index is above the 50 percent mark, for the fourth
Both output and new orders increased, employment grew for the first time in six
months and firms also increased their buying activity and inventory holdings in
response to rising new business, according to Markit.
In a similar
picture, the Business Confidence Index (BCI) stood at 51.9 points in November
2021, 0.7 points higher than October 2021.
Business sentiments were positive in all sectors save for agriculture and wholesale-retail trade sectors.
The Bank of
Uganda’s Monetary Policy Report for December shows that while international
trade is yet to get to the pre-covid 19 levels, there has been an improvement
lately, especially from coffee and gold.
country decided to institute new measures like lockdown against a new surge in
covid 19 ingestions, this could affect growth going into the year 2022, which
for now looks brighter, according to the BOU report.
on the economy (three months to February 2022) is more optimistic mainly
because of the much-anticipated full opening of the economy in January 2022.
Prices are expected to remain high in the short term and order volumes are
expected to increase,” the report says.
There was an
improvement in the balance of payments and a 246-million-dollar surplus was
recorded. But this was mainly because of reduced imports and not necessarily an
increase in exports.
on all import categories; investment, consumption, and government; decreased, and
this was attributed to subdued domestic demand.
also slightly lower due to lower domestic production and were further affected
later when exports of gold were halted over tax disputes.