June 8, 2020 / 1:22 PM / 24 days ago

Uganda's economic growth slumps to 3.1%

KAMPALA (Reuters) - Uganda’s economic growth is expected to decline by more than half in the financial year to June 30 due to the effects of the COVID-19 crisis, the country’s statistics office said on Monday.

The East African country’s economic growth is expected to have slowed to 3.1%, down from 6.8% in the previous year, mainly due to reduced global demand following the coronavirus outbreak.

Mining and quarrying activities contracted by 2.8% during the period compared to 33.4% expansion in the year ended June 2019 while growth in sectors like manufacturing and construction slowed sharply.

The central Bank of Uganda on Monday slashed its policy rate by 100 basis points to 7%, the second major cut in about two months, to pump liquidity into the economy and stimulate activity.

Uganda implemented a tight lockdown to try to prevent the spread of the coronavirus including shuttering all but essential businesses, closing borders and schools, and banning public gatherings.

Activities in sectors like tourism, retail and manufacturing, which are key pillars of the economy, were virtually halted.

Authorities have since begun easing the lockdown but restrictions like border and school closures remain.

Uganda has recorded 722 cases of COVID-19 and no deaths.

Reporting by Elias Biryabarema,; Editing by David Goodman and Ed Osmond

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