Africa-Press – Uganda. Uganda’s economy registered resilience against the negative impact of Covid-19 in the first half of the fiscal year 2021/22 with the services sector growing by 7.9 per cent in the first quarter compared to negative growth of 4.5 per cent in quarter one of the previous financial year.
The half-year macroeconomic & fiscal performance report for the financial year 2021/22, the Ministry of Finance, Planning and Economic Development reveals that the industry sector grew by 0.3 per cent compared to negative growth of 2.7 per cent in quarter one of the previous financial year (2020/21).
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In the first half of the year, the agricultural sector continued to grow although at a slower pace of 3.6 per cent compared to 6.8 per cent in the same quarter of the previous financial year.
Overall, the first quarter of the financial year 2021/22 registered economic growth of 3.8 per cent reflecting an improvement in GDP from the same quarter of the previous financial year. This was mainly due to increased growth momentum in both the industry and services sectors.
In addition, the Ministry of Finance, Planning and Economic Development said high-frequency indicators of economic activity particularly the Composite Index of Economic Activity (CIEA), the Purchasing Managers Index (PMI), and the Business Tendency Index (BTI) all reflected a continued recovery in business activity for the first half of FY 2021/22.
While these indicators reflected a bit of economic struggle during the month of July as the economy had just emerged from the second lockdown, they bounced back in the months that followed.
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The CIEA on average grew at 5 per cent compared to the same period last year while the PMI and the BTI both recorded indices above the 50 per cent mark threshold from August to December 2021 as the gradual easing of the June-July lockdown measures led to growth in output and new orders.
The minister of Finance, Planning and Economic Development, Matia Kasaija said during the period under review, that fiscal, monetary and financial policies were geared towards supporting aggregate demand through provision of affordable financing, for example, the ‘Emyooga’ programme; expediting the payment of domestic arrears to the private sector; prioritising social spending in health and education as well as maintaining an accommodative monetary policy stance so as to accelerate economic recovery.
“In addition, the full re-opening of the economy in January 2022 is expected to restore economic activity in all sectors including tourism, education, and entertainment. As a result, economic growth is projected to increase to 3.8 percent in FY 2021/22 from 3.4 percent in FY 2020/21,” Mr Kasaija said.
The first half of the fiscal year 2021/22 was characterised by a resurgence in a rise in Covid-19 inflection.
The key risks to economic recovery emanate from the resurgence in Covid-19 infections and the emergence of new Covid-19 variants.
However, Mr Kasiaja said the government will continue to prioritise the vaccination of citizens to contain the spread of the pandemic.
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“Going forward, the government will aim at accelerating economic growth to pre-pandemic levels of 6-7 percent through increasing productivity in key growth sectors, ensuring effective implementation of public infrastructure projects, fast-tracking investment in the oil and gas sector, and improving efficiency in public service delivery,” he said.
The International Monetary Fund (IMF) said on January 25, 2022 that the global economy is projected to grow at 5.9 per cent in 2021 and 4.4 per cent in 2022 from -3.1 per cent in 2020, as vaccination and policy support continue.
Similarly, economic growth in Sub-Saharan Africa (Uganda’s largest export destination) is projected to increase to 4.0 per cent in 2021 and 3.7 per cent in 2022 from -1.7 per cent in 2020, which will further support recovery in Uganda’s economic growth.
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