Exchange rate and gross domestic product in Uganda (2003-2012).
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Date
2014-04
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Publisher
Kampala International University, College of Economics and Management
Abstract
This research study was about Exchange Rate and Gross Domestic Product (GDP) and it was conducted in Uganda. This research study was guided by three objectives, that is, to determine the level of exchange rates in Uganda (2003 — 2012), to determine the level of GDP in Uganda (2003 — 2012), and to establish whether there is a relationship between exchange rates and GDP in Uganda (2003 — 2012).
The research hypothesis was “There is no relationship between exchange rates and GDP growth rates in Uganda (2003 — 2012)” Therefore time series analysis such Correlation and regression analysis were used in analyzing data.
The researcher found out that the level of exchange rate in Uganda (2003 — 2012) has been increasing though with some fluctuations. Generally, the exchange rates in Uganda have been increasing from 92.2 in 2003 to 124.6 in 2013; also he found out that the GDP growth rates had some ups and downs of fluctuations with the highest GDP rates in Uganda was in 2008.
Concerning the third objective of the study, this was concerned with establishing relationship between exchange rates and GDP in Uganda (20013 — 2012). In this, the researcher found out that there is a negative correlation between exchange rates and GDP in Uganda (20013 — 2012), with (r -0.470). This led to the rejection of the null hypothesis. The negative relationship between exchange rates and GDP growth rates indicated that increasing exchange rates leads to decreasing GDP growth rates in Uganda.
The exchange rates in Uganda have been increasing showing a continued loss of value of Ugandan currency. This is not good as the real purchasing power of domestic currency reduces comparably to international currency. However, continued depreciation also makes the imports expensive hence promoting domestic production of goods and services. The results indicated that the GDP has been increasing though at a decreasing rate. Uganda experienced the highest growth rate in 2006 and the least in 2013.
In finding relationship, it also shown that the effect of exchange rate on GDP growth rates in low. This means that there are other factors affecting GDP in Uganda. It however important to note that if Uganda is to improve GDP growth rates, there is a need to maintain exchange rates low to match economic growth
Description
A Research Report Submitted to the College of Economics and Management as a Partial Fulfillment of the Requirements for Award of Bachelors Degree of Science in Statistics of Kampala International University
Keywords
Exchange rate, Gross domestic product, Uganda