BoU says 2022 economic outlook is more positive than earlier projected Kampala, Uganda | JULIUS BUSINGE | There is good news from Bank of Uganda indicating a big rebound in economic growth in 2021, meaning Ugandans got more money in their pockets to buy goods and services.
In its monetary policy statement for February 2022, issued on Feb.14, Deputy Governor, Michael Atingi-Ego, maintained the policy interest rate – the central bank rate – at 6.5% citing improvements in economic activities, while also signaling to banks to possibly lend more to the private sector.
He said, the economy is estimated to have bounced back in 2021 growing in the range of 6.5-7%, higher than 1.5% contraction registered in 2020 as the COVID-19 pandemic forced some sectors of the economy to shut.
“The high frequency indicators of economic activity for Oct.2021 to January 2022 suggests that the economy was on a strong rebound,” he said. He explained that domestic demand is making a strong comeback as covid restrictions are eased, adding to the gains from robust external demand.
Considering this recovery and signs and the effects of the Omicron covid variant on economic activity has been relatively small, the outlook for economic growth is more positive than earlier projected,” Atingi-Ego said.
However, he said, in 2022, there could be a loss of growth momentum as global factors turn adverse. But real GDP is projected to grow by around 6% as domestic demand recovery broadens.
Lower global growth, continuous supply chain disruptions, and tighter global monetary and financing conditions could constrain external demand and negatively impact economic growth.
Inflationary pressures have remained low, reported at 2.3% (core) at the end of January which is below the 5% working target for BoU; the exchange rate has improved, with the Uganda Shilling trading stronger at UgxShs3500 (on average) in the past weeks and commercial banks interest rates for trusted borrowers remain relatively low, at an average of 18%.
Atingi-Ego said, further management of COVID-19, could support investments and boost confidence amongst investors, resulting in positive growth of the economy.
On Feb.11, a few days to his monetary policy committee meeting, Atingi-Ego together with the Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi had spoken at the Stanbic Bank 2022 Economic Outlook Forum.
Atingi-Ego said Bank of Uganda’s credit relief measures directed to education and hospitality sectors too will boost economic growth.He said, education alone contributes 3.8% to the overall GDP of Uganda and […]
