Monthly survey reveals drop in economic growth

KAMPALA. A monthly Purchase Managers Index (PMI) indicates that there was a slight decline in economic activity for the month of September which fell from 54.1 per cent to 53.8 per cent.
Mr Jibran Qureshi, the Standard Bank regional economist for East Africa, while announcing the results in Kampala last week, said even though the headline PMI fell to 53.8 from 54.1 in August, the average of 54.1 in the three months to September was still higher than the average of 51.6 in the first half of the year.
He attributed the growth to the strong performance from the coffee sector.
“However, the recent armyworm infestation could still pose a threat to food crops prices and agricultural productivity towards the back end of the year. That said, a gradual improvement in private sector credit growth should bode well for domestic demand,” he said.
Mr Jibran said the agriculture, industry, services and wholesale and retail sectors continued to register growth of output and new business inflows in September.

Central Bank lowers CBR
The Ugandan private sector is being encouraged to increase its appetite for credit in a bid to boost economic activity.
In the recent Monetary Policy Statement for October, Bank of Uganda announced a further downward revision of the Central Bank Rate (CBR), the fifth in the past nine months to a new record low of 9.5 per cent since the introduction of the CBR in 2011.
According to Central Bank Governor Emmanuel Tumusiime-Mutebile: “Given that annual core inflation is forecast to remain around the medium term target of 5 per cent and economic activity is slowly gaining momentum, a cautious easing of monetary policy is warranted to boost private sector credit growth and to strengthen economic growth.”