Africa-Press – Uganda. Uganda’s economic performance continued on a steady growth trajectory in January 2026, supported by improving business conditions, rising consumer demand and sustained employment growth, according to the latest macroeconomic performance report.
High-frequency indicators pointed to continued expansion in private sector activity. The Purchasing Managers’ Index (PMI) and the Business Tendency Index (BTI) both remained above the 50-point threshold during the month the benchmark that signals growth in economic activity and business optimism.
The PMI, which tracks output, new orders, employment and supplier delivery times in the private sector, indicated sustained improvement in operational conditions. Similarly, the BTI reflected positive sentiment among firms regarding the short-term business outlook, underpinned by stronger demand and improved sales volumes.
Inflationary pressures remained broadly contained despite a slight uptick. Annual headline inflation rose marginally to 3.2 percent in January 2026, up from 3.1 percent recorded in December 2025.
The increase was mainly attributed to a rise in core inflation which excludes volatile food crops and energy prices as well as higher Energy, Fuel and Utilities (EFU) inflation.
However, inflation remains well below the medium-term policy target of 5 percent, providing policy space to support growth without triggering price instability.
On the external front, the Ugandan Shilling strengthened further, appreciating by 0.4 percent against the US Dollar in January 2026. The currency traded at an average mid-rate of Shs 3,562.14 per US Dollar, compared to Shs 3,575.23 per US Dollar in December 2025.
The appreciation was largely driven by the global weakening of the US Dollar, alongside increased foreign exchange inflows from merchandise exports and portfolio investments.
Strong export performance particularly in coffee and mineral products boosted foreign currency supply in the domestic market, supporting exchange rate stability.
Monetary policy remained accommodative but cautious. The Central Bank Rate (CBR) was maintained at 9.75 percent in January 2026, marking the sixteenth consecutive month at this level.
The Bank of Uganda considers the rate appropriate to support private sector credit growth and economic activity, while ensuring inflation stabilises at the 5 percent target over the medium to long term.
External sector performance improved significantly on a year-on-year basis. Uganda’s merchandise trade deficit narrowed by 24.0 percent to USD 206.42 million in December 2025, down from USD 271.65 million recorded in December 2024. The improvement was primarily driven by robust export growth, which outpaced the increase in imports.
Merchandise export receipts surged by 83.5 percent, rising from USD 760.31 million in December 2024 to USD 1,395.07 million in December 2025.
The sharp increase was largely attributed to higher earnings from coffee exports, mineral products and cocoa beans, reflecting both improved international prices and increased export volumes.
The strong export momentum not only strengthened the external position but also enhanced foreign exchange reserves and supported macroeconomic stability.
Overall, the January 2026 data signals a resilient and expanding economy, characterised by improving business confidence, stable inflation, exchange rate appreciation and a narrowing trade deficit reinforcing Uganda’s positive growth outlook for the first quarter of the year.
