According to the Bank of Uganda (BOU), in its State of Economy Report for December 2022, this East African country experienced a growth in its Foreign Direct Investment to $474.8m (about Shs1.769 trillion), based on a solid performance from its oil industry.
This, by extension, inflated the value of the Ugandan Shilling, which had, for some time during the year, lost some of its value, prior.
The Bank also disclosed an 18% slowdown in capital outflows to $227.6m (about Shs845.8b), signaling a return of investor confidence.
The Bank of Uganda stated, “the increased inflow was on account of a drawdown on deposit to a tune of $125.8m (about Shs468.7b).”
The country’s recent bout with an Ebola outbreak was a deterrent to the growth of the travel and tourism sector in the country.
According to BoU, “Ebola is expected to continue weighing down tourism inflows, while high government expenditure on imports and debt service obligations will likely constrain reserve build-up, further weakening Uganda’s balance of payments position.”
Other economic events in Uganda to consider during the year includes the account deficit which had expanded annually and quarterly, by $112.7m and $41m to $3.9b and $1b. This is a result of the 18.5% decline in trade balance and a 25.9% increase in the services deficit.
Exports in Uganda fell substantially, recording figures of about $4.1b while the imports trended in the opposite direction, rising to $7.8b.
Conclusively, the bank noted that in the short-term, Uganda’s trade caste would predominantly be driven by a few factors, including geo-political tensions, high borrowing costs, elevated financial vulnerabilities, subdued global growth and movements in global commodities prices.
