By Dennis Sigoa
Uganda’s economy continued to show signs of strengthening in the months leading to March 2026, supported by rising exports, steady demand and improving business conditions.
According to the latest performance report, the Composite Index of Economic Activity (CIEA) rose by 0.6 percent between January and February 2026 to 185.6, pointing to sustained expansion. The growth was driven by increased export earnings, stable inflation and steady growth in private sector credit.
Business activity in the private sector also remained firm. The Purchasing Managers’ Index (PMI) stood at 54.3 in March, up slightly from 54.2 in February, indicating continued improvement in operating conditions. The increase was largely due to higher output and new orders, prompting firms to expand raw material purchases and hire more workers.
Investor confidence remained positive during the period. The Business Tendency Index (BTI) registered 57.83 in March, well above the 50 mark, signalling optimism among businesses, particularly in the agriculture and financial sectors.
Inflation eased slightly despite rising fuel costs. Annual headline inflation declined to 2.8 percent in March from 2.9 percent in February, mainly due to slower increases in core inflation and food prices.
However, the Ugandan shilling weakened against the US dollar. The currency depreciated by 4.5 percent, trading at an average of Shs 3,730.53 per dollar in March compared to Shs 3,568.23 in February. The decline was partly linked to the global strengthening of the US dollar and increased demand for foreign currency from importers amid supply chain disruptions tied to tensions in the Middle East.
On the external front, Uganda recorded a trade deficit of USD 61.91 million in February 2026, widening from USD 44.54 million in the same month last year. The gap was driven by a higher import bill, which outpaced export growth.
Even so, export earnings posted strong growth, rising by 63.7 percent year-on-year to USD 1.37 billion in February 2026. The increase was largely attributed to higher receipts from gold and coffee exports.
Overall, the data points to a resilient economy, with strong export performance and business activity offsetting pressures from a weaker currency and rising import costs.
