Russo-Ukraine crisis dampens Uganda's economic recovery- central bank
Bank of Uganda in a statement, said the conflict coupled with the supply and demand imbalances that were caused by the COVID-19 were the main underlying sources of broader price pressure.
Effects of the Ukraine crisis have slowed Uganda's economic recovery after the lifting of COVID-19 restrictions had provided hope, the country's central bank had said.
Bank of Uganda in a statement, said the conflict coupled with the supply and demand imbalances that were caused by the COVID-19 were the main underlying sources of broader price pressure.
New figures by the bank showed the country's annual headline inflation and core inflation rose to 6.3 per cent and 5.1 per cent in May 2022 from 2.7 per cent and 2.3 per cent in January 2022.
The annual headline and core inflation were now forecast to average seven per cent to 6.1 per cent respectively in 2022, which was higher than earlier projections.
Inflation was projected to peak in the second quarter of 2023 before gradually declining to the stable around the medium-term target of five per cent by mid-2024.
The bank said it would continue to increase the Central Bank Rate (CBR) until inflation was firmly contained around the medium-term target.
The bank on Thursday, announced an increase of the CBR to 7.5 per cent from 6.5 per cent in efforts to control the rising inflation.
Economic growth was now projected to grow at 4.5-5.0 per cent in 2022, which was lower than the previous projection of 5.5-6.0 per cent as of April 2022.
The risk to the growth outlook, according to the bank, included weaker global growth, escalation of geopolitical conflicts, persistent global supply chain disruptions, heightened global economic uncertainty and higher inflation.
In spite of the risks, the bank said in the medium term, the economy would grow at 6-7 per cent supported by public and private investments in the oil sector.