Economic indicators point to strengthening momentum in Uganda’s economy during July 2025, with improvements in business sentiment, inflation easing, and robust export performance, according to the Ministry of Finance, Planning and Economic Development (MoFPED).
Business Activity and Sentiment Remain Positive
The Purchasing Managers’ Index (PMI) stood at 53.6, staying above the 50-point threshold that signals expansion, although slightly lower than June’s 55.6, reflecting rising input costs.
The Composite Index of Economic Activity (CIEA) rose to 181.03 in June (latest available), up from 179.14 in May, marking 1.1% growth—a notable acceleration from May’s 0.3%.
Business sentiment, as measured by the Business Tendency Index (BTI), remained optimistic at 58.3, indicating positive outlooks on future orders, business conditions, and employment.
Inflation Eases Slightly
Headline inflation in July cooled to 3.8%, down from 3.9% in June. Food crop inflation dropped to 3.2% from 4.7%, driven by improved supply and falling prices for items like tomatoes and cabbage.
Core inflation slipped marginally to 4.1% from 4.2%. Energy, Fuel & Utilities (EFU) inflation stabilised at 0%, marking a steady price level compared to the previous year.
Financial Market and Currency Stability
The Ugandan Shilling appreciated by 0.5%, averaging UGX 3,586.57/USD, strengthened by robust FX inflows from offshore investors, remittances, and coffee export proceeds amidst coordinated monetary and fiscal policy.
The Central Bank Rate (CBR) held at 9.75%, reflecting Bank of Uganda’s steady stance to contain inflation while supporting growth.
Lending rates climbed slightly to 19.07%, up from 18.64%, largely due to demand for personal and household loans.
Private Sector Credit expanded by 1.6% month-on-month, reaching Shs 23,901.94 billion in June—10.5% higher year-on-year.
The government raised Shs 2,690.6 billion from T-Bills and a T-Bond auction; yields on 91-day and 364-day T-Bills dropped, while yields on T-Bonds across tenors also declined, signalling strong investor demand.
Trade and External Sector: Export Boom Amid Rising Imports
Merchandise exports surged from USD 702.5 million in June 2024 to USD 1,154.4 million in June 2025, boosted by earnings from coffee, minerals, tea, fish, and flowers.
Conversely, imports climbed sharply to USD 1,427.3 million, up from USD 947.4 million year-on-year, driven by a rise in private sector oil and non-oil imports.
As a result, the trade deficit widened to USD 272.9 million, from USD 244.9 million in June 2024.
Fiscal Performance: Deficit Narrower than Planned
Uganda recorded a fiscal deficit of Shs 1,459.24 billion in July, lower than the planned Shs 1,659.62 billion, due to higher-than-expected revenues and underspending.
Total revenues and grants reached Shs 2,537.77 billion, exceeding the target by 3.2%, thanks in part to Shs 168.21 billion in grants to the INVITE project.
Expenses amounted to Shs 3,619.60 billion, below the target, while capital spending outperformed, hitting 109.4% of the budget, mainly due to disbursements to the INVITE project.
Outlook
July’s economic indicators underscore Uganda’s steady recovery, with expanding business activity, easing inflation, robust exports, and cautious fiscal management. However, rising imports and trade deficits highlight the need for continued policy vigilance to sustain growth while managing external pressures.
