Uganda’s Economy Sees Impressive Growth As Trade Deficits Shrink, Exports Surge

Uganda's Economy Sees Impressive Growth As Trade Deficits Shrink

According to Uganda’s finance ministry, the nation’s yearly and monthly trade deficits with the rest of the world have decreased as a result of rising export revenues that have more than offset rising import costs.

The finance ministry’s monthly report on the state of the economy for July 2023 states, “Between May and June 2023, the merchandise trade deficit narrowed by 12.3 percent from $82.08 million to $247.43 million. Year-on-year, the merchandise trade deficit narrowed by 32.2 percent from $365.11 million in June 2022 to $247.43 million in June 2023,” the report shows.

According to an interview with the Ministry Head of Communications Apollo Munghinda, Uganda exported goods valued at $650.57 million in June 2023. 

“This represented an 11.1 percent increase when compared to $585.81 million exported during May 2023. This increase was mainly on account of higher export earnings from beans, simsim, cotton, and gold registered during the month,” he noted.

Additionally, according to Munghinda, within the same time period, coffee export receipts for the month were $90.56 million, up 23.6 percent from $73.26 million in May 2023. This increase was mostly related to the increased price of Robusta coffee on the international market, which encouraged exporters to remove beans from their warehouses for sale.

“In comparison to the same month the previous year, merchandise exports grew by 78.2 percent from $365.13 million in June 2022 to $650.57 million in June 2023. This was largely attributed to increased export earnings from maize, simsim, gold, and hides and skins,” he observed on August 29.

The monthly economic performance report for July also reveals that, with 33.9 percent of the market share, the East African Community (EAC) continued to be Uganda’s largest export market in June 2023.

Kenya, South Sudan, and the Democratic Republic of the Congo accounted for 31.4 percent, 25.7 percent, and 24.7 percent of all exports from Uganda to the EAC area, respectively.

According to the survey, Asia and the Middle East, which each accounted for 32.8% and 13.8% of Uganda’s exports, came in second and third place. 

“It is worth noting that Uganda’s export earnings from Asia significantly increased from $28.12 million in June 2022 to $213.53 million in June 2023, owing to the increase in gold exports to the region,” the Ministry of Finance report reads.

The value of private sector imports, specifically those of animals and animal products, petroleum products, vegetable products, beverages, fats, and oils, as well as textiles and textile products, has increased by 3.5 percent since May 2023, from $867.89 million to $898 million in value.

Comparing June 2022 to June 2023, it can be seen that merchandise imports increased by 23.0%, from $730.24 million to $898.0 million. This growth was primarily fueled by higher import quantities of goods including minerals (excluding petroleum products), vegetables, meat, dairy, drinks, and fats and oils.

According to statistics from June 2023, the Ministry of Finance reports that Asia continued to be Uganda’s top supplier of imports, making up 36.9% of all imports. China and India contributed the most to Asia, making up a combined 74.4% of the region’s imports.

The EAC, the Middle East, and the Rest of Africa were noteworthy regions as well; they contributed 26.9%, 15.3%, and 10.5% of all imports, respectively. Tanzania and Kenya, which together account for 62.5 percent and 33.5 percent of Uganda’s overall imports, have emerged as the EAC’s two main suppliers of goods.

According to the report’s trade balance by region, Uganda had deficits in its trade with Asia, the rest of Africa, the Middle East, the EAC, and the rest of Europe in June 2023, totaling $117.72 million, $69.59 million, $48.28 million, $21.03 million, and $1.74 million, respectively.

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