Uganda’s economy continued to demonstrate resilience and steady growth in March 2026, supported by strong export performance, improving business conditions, and stable inflation, according to the latest data from the Ministry of Finance.

High-frequency indicators point to sustained expansion in economic activity, with the Composite Index of Economic Activity rising by 0.6 percent between January and February to reach 185.6. This growth reflects increasing aggregate demand, steady private sector credit, and a notable rise in exports in the months leading up to March.

Business activity in the private sector also remained robust. The Purchasing Managers’ Index registered 54.3 in March, slightly up from 54.2 in February, signaling continued improvement. Firms reported higher output and new orders, prompting increased purchases of raw materials and expansion in hiring, an indication of strengthening employment conditions.

Investor sentiment remained firmly positive during the period. The Business Tendency Index stood at 57.83, well above the threshold of 50, highlighting optimism among businesses, particularly in the agricultural and financial sectors. This sustained confidence suggests that investors expect favorable economic conditions to continue in the near term.

Inflation remained contained despite rising fuel costs. Annual headline inflation eased slightly to 2.8 percent in March from 2.9 percent in February, driven by a slowdown in both core inflation and food crop prices. The stability in prices provides a supportive environment for consumption and investment.

However, the exchange rate presented a key challenge. The Ugandan shilling depreciated by 4.5 percent against the US dollar in March, trading at an average midrate of Shs 3,730.53 per dollar compared to Shs 3,568.23 in February. This weakening was largely attributed to the global strengthening of the US dollar and increased demand for foreign currency by local importers and corporate entities, compounded by supply chain disruptions linked to geopolitical tensions in the Middle East.

Uganda’s external trade position also showed pressure. The country recorded a trade deficit of USD 61.91 million in February 2026, widening from USD 44.54 million in February 2025. The increase was driven by a surge in imports that outpaced export growth over the same period.

Despite the widening deficit, export performance stood out as a major positive. Export earnings rose sharply by 63.7 percent year-on-year to USD 1.37 billion in February 2026, up from USD 839.28 million in February 2025. This growth was largely driven by increased receipts from gold and coffee, highlighting the importance of these commodities in Uganda’s export sector.

Overall, the March 2026 economic performance reflects a strengthening domestic economy supported by rising production, improving business sentiment, and strong export growth. However, challenges related to currency depreciation and the expanding trade deficit underline the need for careful management of external pressures as the year progresses.