The economy was recovering from the effects of the March-to-June 2020 lockdown, with both the Bank of Uganda and the private sector reporting revived activity, despite some sectors remaining under lock.
of the economy has suffered a setback following the 54 days that the country
was under a lockdown, this is according to economic analysts.
was recovering from the effects of the March-to-June 2020 lockdown, with both
the Bank of Uganda and the private sector reporting revived activity, despite
some sectors remaining under lock.
country’s economy grew by about 3.1% in the financial year just ended, which
was slower than the 6.2% that had been forecast before the outbreak of Covid
19. Positive growth was mainly attained from the second and third
quarters, because the first quarter (April to June 2020) was the hardest hit
since that was when the country was put under the first lockdown.
Following the reopening, the economy picked up, but the Bank of Uganda, the
World Bank and the International Monetary Fund were all in agreement with the
Ugandan private sector, that the second wave of infection would reverse these
gains, especially if another lockdown was instituted.
that by then, a reasonable part of the Ugandan population would have been
vaccinated. However, by the time the second wave set in, less than
one percent had been vaccinated.
Now the Purchasing Manager’s Index (PMI), a monthly study of the private sector
activities in Uganda shows that in July, activities and the investors’
perception of the business continued to fall. The PMI slipped to 34.6 in
July, down from 34.9 recorded during June.
This is the second successive decline in business conditions since the lockdown
was enforced in June 2021. The latest reading is well below the series
average of 52.5.
below 50 indicates a decline in business activity and a deteriorating
environment, while above the 50 mark, indicates a positive environment and
the index, output, new orders and employment were all down for the second
successive month in July. This also led to a reduction in prices especially
because of low demand.
reduction in prices was noted for the first time in 14 months. Companies
lowered their selling prices amid weak demand. Although on a more positive
note, firms were optimistic that activity will rebound once lockdown
restrictions are lifted,” Ronald Muyanja, the Head of Trading at Stanbic Bank
which is sponsored by Stanbic Bank involved some 400 respondents covering the
agriculture, industry, construction, wholesale/retail and the services sectors,
and focuses on new orders, output, employment, suppliers’ delivery times and
stocks of purchases.
The index that more than half of all respondents signalled declines in each of
the sectors. Sectors like tourism, education and entertainment are still
largely under strict measures, with industries like bars and entertainment
places not allowed to open.
effects on other sectors like brewers, stationers, and transporters. As a
result, these cannot make new recruitments, make orders or increase salaries,
among other activities.
Covid-19 lockdown resulted in further reductions in both output and new orders.
Output has decreased across all sectors. In line with falling workloads,
companies have also scaled back their employment and purchasing activity for
the second consecutive month,” Muyanja added.
However, the researchers say that this was outweighed by lower charges for
utilities, falling purchase prices and a reduction in staff costs resulting in
a decline in overall input costs.
the Uganda Bureau of Statistics, Headline Inflation for Uganda for the 12
months to July 2021 rose by 2.1 percent, up from 2.0 percent in June 2021.
mainly attributed to the Annual Food and Non-Alcoholic Beverages Inflation that
increased to 0.7 percent in July 2021 from minus 1.6 percent recorded in June
Annual inflation for ‘Restaurants and Accommodation Services’ increased to 1.3
percent in July 2021 from 0.2 percent and ‘Housing, Water, Electricity, Gas and
Other Fuels’ increased to minus 0.9 percent in July 2021 from minus 1.5 percent
in June 2021,” says UBOS inflation consumer price index.
costs decreasing and demand weak, companies lowered their selling prices, for
the second month running, with agriculture as the only sector registering a rise
Yet the low
prices could not lead to increased purchases due to the lockdown especially in
declined in July, continuing a trend that has lasted in the past 11 months.
suggests that reductions in business activity could have affected the ability
of companies to export their products.
also an indication that some countries instituted more restrictive travel
measures from countries that are registering sharp rises in new infections,
Uganda being one of them.
pointed to a second successive lengthening of suppliers' delivery times.
Market analysts widely linked delivery delays to the effects of the lockdown,
with travel restrictions and roadblocks being mentioned.
going forward, firms were optimistic that activity will rebound once lockdown
restrictions are lifted.