KAMPALA, Dec. 11 (Xinhua) -- As 2019 is coming to an end, Uganda's central bank said the east African country experienced a slowdown in economic growth, attributing the effect to slowing global activity and domestic factors.

Emmanuel Tumusiime-Mutebile, governor of Bank of Uganda on Dec. 9 said the same impact is likely to be faced in 2020.

"Overall, economic growth is projected to be in the range of 5.5-6.0 percent in 2019 and the pace sustained into 2020. This projection remains subject to downside risks, mainly stemming from uncertainties in the global economy," Mutebile said.

At the time of the national budget reading for the 2019/20 fiscal year in June, government projected a growth rate of 6.2 percent.

The central bank's high frequency indicator of economic activity, the Composite Index of Economic Activity, points to a moderation of economic activity since the beginning of 2019.

"Indeed, in the first 10 months of 2019, tourism receipts are estimated to have grown at a lower rate and merchandise exports, excluding gold and re-exports, contracted reflecting moderating external demand. On the domestic scene, moderation of domestic demand conditions could also have contributed to the slowing of economic activity," Mutebile said.

The governor said a combination of persistent global geo-political tensions, uncertainty around trade policies and softening domestic private sector investment spending could generate headwinds to economic growth.

He warned that public sector financing needs have risen amidst limited fiscal space, raising the prospect of further pressure on the domestic borrowing costs.

Uganda's current monetary and fiscal policies are geared towards growth support strategy by execution of accommodative monetary policy and increased spending on infrastructure development.

"Over the medium term, monetary and fiscal impetus is expected to support stronger Gross Domestic Product growth. As a result, private sector investment will increase, providing additional support to the economic growth outlook," Mutebile said.

He explained that the inflation outlook remains unchanged from the October 2019 forecast round, revealing that annual core inflation is projected to remain below the 5 percent target until the fourth quarter of 2020.

"However, the risks to the inflation outlook in the near term (12 months ahead) are assessed to be largely on the upside. Due to unpredictable weather patterns, food price inflation remains uncertain," he said.

A further upside risk to the inflation outlook, according to Mutebile, is the capital flow volatility, which could put pressure on the exchange rate.

He noted that inflation is forecast to converge to the target of 5 percent in the medium-term (2-3 years). Enditem

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