Exports drive Uganda’s trade deficit down as gold slump exposes vulnerability

Uganda’s merchandise trade deficit narrowed sharply over the past year, buoyed by strong export growth led by coffee and gold, according to the Performance of the Economy Report for December 2025 released by the Ministry of Finance. However, a sudden fall in export earnings—particularly from gold—has exposed the economy’s continued vulnerability to commodity price swings.

On a year-on-year basis, the country’s trade deficit shrank by 32.4 percent, easing from $343.7 million in November 2024 to $232.3 million in November 2025. The improvement was largely driven by export earnings, which surged by 70.4 percent over the period, outpacing the 36.5 percent growth in imports.

Economists say the figures point to a rare moment of strength in Uganda’s external trade position, underpinned by rising agricultural output and favourable global prices. Export earnings rose from $698.46 million in November 2024 to $1.19 billion in November 2025, with coffee and gold accounting for the bulk of the gains.

Coffee exports stood out as a major driver, with earnings jumping by 70.8 percent—from $108.91 million to $185.99 million—over the year. The Ministry of Finance attributed the growth to increased production as harvests peaked in the central and eastern regions, coupled with an upswing in global coffee prices.

Gold exports also played a significant role in lifting annual export receipts, reinforcing Uganda’s position as a key regional gold exporter. Together, the two commodities masked weaknesses in other sectors and helped narrow the trade gap despite steady growth in imports.

However, the positive annual picture was sharply contradicted by month-on-month data, which showed a significant deterioration in November. Uganda’s trade deficit widened by 212 percent between October and November 2025, jumping from $74.46 million to $232.33 million.

The reversal was largely driven by a steep decline in export earnings, which fell by 20.4 percent from $1.5 billion in October to $1.19 billion in November. Gold exports were the main culprit, with earnings dropping by 33.7 percent—from $964.6 million to $639.26 million—over the two months.

The sharp fall underscores the economy’s heavy reliance on gold exports and the risks associated with commodity concentration. Analysts warn that while gold has delivered strong revenues in recent years, price volatility and external demand shocks can quickly reverse gains.

Still, the report offers signs of resilience beyond gold. Non-gold exports grew by 3.6 percent month-on-month, rising from $531.85 million in October to $551.25 million in November. The growth was driven by exports of cocoa beans, tobacco, fish and other traditional commodities.

Finance ministry officials say the performance of non-gold exports highlights the importance of diversifying Uganda’s export base to reduce exposure to global commodity fluctuations. They argue that sustained investment in agriculture, agro-processing and value addition is critical to stabilising export earnings and improving the trade balance over the long term.

While the narrowing of the annual trade deficit offers encouragement, the sharp monthly swing serves as a reminder that Uganda’s external sector remains fragile. As global markets remain uncertain, economists caution that maintaining export momentum—especially beyond gold—will be key to safeguarding recent gains and strengthening the country’s balance of trade.