Uganda’s Economy Maintains Strong Growth Trajectory, Trade Deficit Narrows Sharply
December 2025 Data Shows Robust Business Confidence and Sustained Expansion
KAMPALA – The Ugandan economy ended 2025 on a strong note, with key indicators pointing to sustained expansion, rising business optimism, and a significant improvement in the country’s trade balance, according to the latest performance report from the Macroeconomic Policy Department (MEPD).
Economic activity continued to strengthen in December, supported by favourable demand conditions and improving business confidence. The Purchasing Managers’ Index (PMI), a key high-frequency gauge of private sector activity, rose to 54.0 in December from 53.8 in November, firmly remaining above the 50.0 threshold that separates economic expansion from contraction.
This positive sentiment is reflected in the Business Tendency Index (BTI), which climbed to 57.20 in December from 56.20 the previous month, indicating increasing optimism among business operators and investors. The broader Composite Index of Economic Activity (CIEA) also continued its upward trend, reaching 181.48 in November.
Export Boom Drives Trade Deficit Improvement
A standout feature of the report is the dramatic narrowing of Uganda’s merchandise trade deficit. In November 2025, the deficit shrank by 32.4 percent to USD 232.3 million, down from USD 343.7 million in November 2024.
This sharp improvement was propelled by a powerful surge in export earnings, which grew by an impressive 70.4 percent year-on-year. Exports climbed from USD 698.46 million in November 2024 to USD 1,190.51 million in November 2025. The performance was largely driven by increased foreign exchange receipts from key commodities, notably coffee and gold.
Stable Prices and Currency
The report also confirmed sustained price stability. Annual headline inflation remained unchanged at 3.1 percent in December 2025. This stability was maintained as a moderation in core inflation, particularly in services, offset increases in food crops and Energy, Fuel & Utilities (EFU) inflation.
The Ugandan Shilling held its ground against the US Dollar, demonstrating remarkable stability. In December, it traded at an average mid-rate of Shs. 3,575.23/USD, virtually unchanged from the Shs. 3,575.14/USD rate recorded in November.
Officials Cite Policy Effectiveness
The Macroeconomic Policy Department, which released the data, stated its mission is to shape policy by providing timely advice and keeping the public informed. The latest figures suggest a resilient economy navigating global uncertainties effectively.
The combination of robust business activity, controlled inflation, a strengthening export sector, and currency stability presents an optimistic picture of Uganda’s economic health as it closed the year 2025.
For more detailed information, visit the Macroeconomic Policy Department portal: mepd.finance.go.ug
Source: Ministry of Finance, Planning and Economic Development (MoFPED), Uganda.
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