Uganda’s central bank on Monday said the country’s economy is on a strong rebound after the easing of COVID-19 restrictions that were closing out some sectors.
Bank of Uganda in a monthly monetary policy statement for February said between the months of October 2021 and January 2022, high-frequency indicators showed that the economy was on a recovery trend.
“Domestic demand is making a strong comeback as COVID-19 related restrictions are eased, adding to the gains of robust external demand,” the statement said.
The bank said the outlook of economic growth is more positive than earlier projected since the recovery, and signs that the effect of the Omicron outbreak has been relatively small. Real Gross Domestic Product is projected to grow by around six percent as domestic demand recovery broadens.
The bank said annual growth is likely to go above seven percent in the medium term as government investment in infrastructure is expected to enhance productive capacity and coupled with increased social spending and recovery in tourism.
The bank warned that the risks to growth outlook remain tilted to the downside.
“On the domestic front, uncertainty about the evolution of the pandemic continues to cast a shadow on the recovery,” the statement said, noting that the resurgence of lockdown measures would weigh on the outlook. It added that the slow execution of public investment projects and further delays in oil investments could dampen the growth outlook.
On the external side, the bank noted that low global growth, continued supply chain disruptions and tighter global monetary and financing conditions could constrain external demand.
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