The governor of the Central Bank of Uganda, Emmanuel Tumusiime Mutebile expects buoyant demand in the economy to strengthen GDP growth in the new financial year [2014/2015] that starts next week.
Mutebile made the remarks at the opening of the new branch of Standard Chartered Bank at the new Acacia Mall in Kamyokya, a busy Kampala suburb, on June 27. The Bank has relocated its branch in Ntinda to Acacia Mall.
The governor expects real GDP to edge up to 6.2% in FY2014/15 from the projected 5.7% in FY 2013/14.
"Faster economic growth should support a recovery of loan demand from the private sector, growth of which has been fairly weak over the last three years," he said. He said they expect that the growth of bank lending to the private sector will accelerate to about 15% in 2014/15 up from around 12% in the current FY.
He added that core inflation will not remain at the current low levels of 3.3% [as of May, 2014], but to rise up to 5-6% in 2014/15.
"Overall, I believe the prospects for macroeconomy in 2014/15 are reasonably propitious for the banking sector and the wider business community," Mutebile said, adding they cannot rule out major risks to the economy, whether from domestic or external factors.
Uganda's economy still relies heavily on weather for agriculture and is open to trade and capital flows, the Governor said.
"Fortunately, the inflation targeting monetary policy framework provides us with the requisite policy tools and flexibility needed to respond to economic shocks," he said.