Economy picking up after country eases COVID-19 restrictions, says Uganda’s central bank

Uganda’s central bank has said on August 10 that although the country’s economy contracted in the second quarter of 2020, there are indications that the economy is picking up as the country eases the COVID-19 lockdown restrictions, according to a news report by News Ghana.

Bank of Uganda (BOU) in a statement issued here to announce the lending Central Bank Rate (CBR) for the month of August said economic activity contracted by 3.2 percent in the second quarter of 2020 as a result of a combination of COVID-19 containment measures and floods.

The bank said complementary fiscal and monetary policy actions have provided a foundation for the recovery of economic activity as the lockdown is relaxed.

"The Composite Index of Economic Activity grew by 5.7 percent month-on-month in June 2020, indicating a pickup in economic activity relative to the contraction registered in the three months to May 2020," the statement signed by Emmanuel Tumusiime-Mutebile, governor BOU said.

The Purchasing Managers’ Index also continued to register improvements since May 2020 and slightly crossed the 50 marks, indicating improvements in the business environment, according to the central bank statement.

The bank said, as the easing of the lockdown continues, the economy is expected to slowly recover, reflecting the effects of a slow rebound in both foreign and domestic demand and, subdued confidence on the part of households and firms.

The statement said many consumers are expected to be hesitant to resume their previous spending patterns, partly due to fears of contracting the virus and uncertainty about earnings. Even those whose incomes were not affected may increase their need for precautionary savings.