Nairobi — Uganda's economy continues to slow down due to the global economic crisis, the latest parliamentary report on the last quarter of the just-ended financial year indicates.

The trade balance -- which measures the net contribution of exports -- posted a deficit of $171 million in the third quarter of 2008/09.

Remittances from Ugandans working abroad shrunk by 47.4 per cent; while the total value of shares traded at the Uganda Securities Exchange declined by 93.7 per cent, the report says. It adds that lending rates shot up by more than two per cent between January and March this year.

The report is by the National Economy Committee of Parliament on the performance of the economy during the third quarter of 2008/9.

It warns that despite the upbeat forecast on the economy in Finance Minister Sydda Bbumba's recent budget speech, effects of the global downturn are real and gradually hitting the economy.

The findings, prepared by the parliament budget office, are yet to be tabled in the House.

They indicate that during the period under review, declined growth spread across most of the macroeconomic indicators; putting brakes on the overall economic growth.

"Uganda is not actually in a recession, but it is certainly experiencing a downturn in growth. Maintaining business as usual with the false hope that our economy is robust could actually create a recessional climate," warned MPs last week during a committee debate.

The survey found marginal increases in imports, amounting to $995.11 million in the third quarter of 2008/9, compared to $836.7 million in the same quarter of 2007/8.

The performance was reportedly dwarfed by the growth in imports in the same period in 2006/7 -- 1,866.6m. Earnings from imports are said to have declined from $345.8m in December 2008 to $330.4m in February 2009.

"The committee observes that this highlights the extent to which the global economic crisis has continued to stress our economy, forcing a cut-back in imports, mainly as a result of the dollar rise against the shilling."

However, the survey indicates that exports performed fairly well, posting a growth of 22.7 per cent compared to the previous period -- second quarter of 2008/9 -- by increasing from $672.1 million to $824.4 million.

But the performance of exports, at $824.4 in the third quarter, is lower than in the third quarter of 2006/7, at $909m.

"This decline is largely attributed to low global demand and a fall in international prices of coffee and other exports to the European market as a result of the global economic showdown," observed the MPs.

They warned that the huge regional demand for Uganda's goods, especially by the neighbouring countries, could be a disadvantage to the economy should production dwindle or remain stagnant.

Remittances reportedly shrunk from $40.8m in the third quarter of 2007/8 to a paltry $27.6m in the same period in 2008/9. Similarly, private transfers through non-government organisations declined by 7.6 per cent; from $126.3m to $116.7m in the same period.

The Foreign Direct Investment to Uganda also declined by 12.44 per cent from $208.7 million in the third quarter of 2007/8 to $182.7 million in the third quarter of 2008/9.

The MPs claim the decline resulted from the global meltdown.

A slump in activity at the Uganda Securities Exchange in the last quarter of 2008/9, attributed to waning interest by foreign institutions, was also reported.

The report says the total value of shares traded at the USE declined from Ush15.6bn, as at the end of March 2008, to Ush983bn at the end of March 2009.

The number of shares that exchanged hands declined by 56.2 per cent from 19.9m shares traded in March 2008 to 8.7m shares traded in March 2009.

The market capitalisation and the USE-All Share index both shed almost 15.5 per cent and 34 per cent, respectively.

To mitigate further losses, the MPs said the government should fast track the implementation of the recently passed Securities Central Depositories Act.