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Low inflation, consumer confidence sustain favourable business conditions

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  • Jeseph, Mawejje
  • Paul, Lakuma

Abstract

The Uganda business climate continued to improve. The index for the current quarter (July - September 2014) is 117.2 and has improved by 24.2 points on a year-on-year basis and by 13.5 points on a quarter-on-quarter basis. The rise in the index suggests continued favourable conditions for doing business in Uganda. The continued improvement in the business climate was driven largely by: low inflation which ensured favourable input and product prices and stronger consumer confidence, which in turn drove business expectations of improved profitability. Despite these positive sentiments, production capacity remained well below potential thus constraining labour demand to a significant degree. Indeed, both indices for capacity utilization and employment improved only modestly indicating underlying risks to business expansion and employment creation. Business perceptions and expectations for the next quarter (October – December 2014) remain favourable on account of expected continuity in price stability. However, persistent challenges due to electricity outages, access to finance and the proliferation of substandard and counterfeit products pose serious risks for doing business.

Suggested Citation

  • Jeseph, Mawejje & Paul, Lakuma, 2014. "Low inflation, consumer confidence sustain favourable business conditions," Uganda Business Climate Index 243925, Economic Policy Research Centre (EPRC).
    • Handle: RePEc:ags:eprcug:243925
    DOI: 10.22004/ag.econ.243925
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