Uganda’s economy continued to demonstrate resilience and expansion in May 2026, supported by improving business conditions, strong consumer demand, and inflation that remains within the government’s target range, according to the latest Performance of the Economy Report released by the Ministry of Finance, Planning and Economic Development.
The report indicates that key high-frequency economic indicators pointed to sustained growth during the month despite emerging pressures from rising fuel prices and global geopolitical tensions.
The Purchasing Managers’ Index (PMI), a key measure of private sector business activity, remained firmly above the 50-point threshold at 54.1 in May, signaling continued expansion in economic activity and improved business conditions across the economy.
Business confidence also strengthened during the month. The Business Tendency Index (BTI) rose to 56.7 in May from 55.2 recorded in April 2026, reflecting growing optimism among businesses in most monitored sectors.
According to the report, the improved sentiment was largely driven by robust consumer demand, which continued to support trade and overall economic performance.
“High-frequency indicators continued to signal resilience and expansion in economic activity during May 2026,” the ministry said in its report.
However, inflation registered a slight increase during the period. Annual headline inflation rose to 3.2 percent in May from 3.0 percent in April, mainly due to higher transport and energy-related costs following increases in domestic fuel prices.
Despite the rise, inflation remains well below the government’s medium-term target of 5.0 percent, suggesting that price pressures are still largely under control.
The report also highlighted pressure on the local currency during the month. The Uganda Shilling depreciated by 1.3 percent against the US Dollar, trading at an average mid-rate of Shs3,764.11 per dollar in May compared to Shs3,716.70 in April.
The Ministry attributed the weakening of the shilling to increased demand for the US dollar by traders seeking to finance higher energy imports and freight costs amid ongoing geopolitical tensions in the Middle East.
The latest economic performance figures come as Uganda continues to pursue its growth agenda under the Fourth National Development Plan, with authorities expressing confidence that strong domestic demand, stable inflation, and improving business activity will sustain economic momentum in the coming months.
Economists say the continued expansion in private sector activity and positive business sentiment provide encouraging signs for the economy, although external risks such as global fuel price volatility and geopolitical developments remain key factors to watch.
