Services, agriculture sectors spur growth

The move of cautious monetary easing has seen Bank of Uganda leaving the CBR at 12 per cent since February 2013 to May 2013.

Improvement in the services sector and the 11 percentage point reduction in the Central Bank Rate, helped Uganda’s economy to grow to 5.3 per cent this financial year, up from 3.4 per cent last financial year. The new growth rate means that there has been an increase in economic activities in the country.

Monetary policy
The Bank of Uganda has been administering cautious monetary policy easing with the view of reviving the country’s high economic growth that had been weakened over the last financial year. The move of cautious monetary easing has seen Bank of Uganda leaving the Central Bank Rate —rate at which commercial banks borrow money from the Central Bank— at 12 per cent since February 2013 to May 2013.

While presenting the monetary policy statement for the month of May, the Governor Bank of Uganda, Mr Emmanuel Tumusiime Mutebile, said the output gap has narrowed, in part, boosted by the reduction in the Central Bank Rate from 23 per cent in February 2012 to 12 per cent in December 2012.

“The underlying economic momentum is expected to remain positive over the medium term. Real GDP growth for the financial year 2012/13 is now projected at 5.3 per cent and is projected to rise to between 6 and 7 per cent in 2013/14,” he said.

Expert’s view
Commenting on the new economic growth released by the Bank of Uganda, senior economist at the World Bank, Ms Rachael Kaggwa, said: “The 5.3 per cent growth for Uganda this financial year is reasonable.” Ms Kaggwa also agreed the projected economic growth of 6 to 7 per cent is achievable over the medium term but not in the short term.

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