KAMPALA, March 2 (Xinhua) -- Uganda's economy showed signs of recovery in the first half of the 2021/22 financial year despite the impact of new COVID-19 variants during the period, according to the country's ministry of finance Wednesday.

The ministry of finance in its half-year economic report, spanning July 2021 to December 2021, said high-frequency indicators of economic activity reflected continued recovery in business activity.

The indicators including the Composite Index of Economic Activity (CIEA), Purchasing Managers Index (PMI) and the Business Tendency Index (BTI) showed that although there was a bit of economic struggle during the month of July as the economy had just emerged from the second lockdown, the economy bounced back in the months that followed.

The CIEA on average grew at 5 percent compared to the same period the previous year while the PMI and the BTI both recorded indices above the 50-mark threshold from August to December 2021 as the gradual easing of the June-July lockdown measures led to growth in output and new orders. The threshold of 50 is a baseline to indicate an increase or a decline in business conditions.

The report showed that the first quarter of the financial year registered economic growth of 3.8 percent, reflecting an improvement in the gross domestic product (GDP) from the same quarter of the previous financial year. This is attributed to increased growth momentum in both the industry and services sectors.

The services sector grew by 7.9 percent compared to negative growth of 4.5 percent in quarter one of the previous financial year while the industry sector grew by 0.3 percent compared to negative growth of 2.7 percent in quarter one of the previous financial year. The agricultural sector continued to grow although at a slower pace of 3.6 percent compared to 6.8 percent in the same quarter of the previous financial year.

The report projected that the economy will grow at 3.8 percent this financial year from 3.4 percent registered in the previous year. This is on account of the expected recovery in production, aggregate demand and trade following the full reopening of the economy in January.

Growth will also be driven by government policy interventions such as support to small businesses as well as an accommodative monetary policy.

"The anticipated global recovery is expected to boost Uganda's international trade further supporting economic growth," the report showed.

The global economy is projected to grow at 5.9 percent in 2021 and 4.4 percent in 2022 from the negative 3.1 percent in 2020, as vaccination and policy support continue, said the finance ministry, warning new variants of the COVID-19 virus, associated lockdown measures and supply chain disruptions would pose concerns for the outlook. - Xinhua