Recent reports on the Uruguayan economy and its projection on the current third quarter, confirm the good performance and revise upwards previous growth outlooks. Domestic demand is considered one of the key factors of the economy dynamism. Furthermore, the world economy recovery and the performance of the neighboring countries, will be reflected in the growth of external demand for both goods and services.
Thus, it is expected that the Uruguayan economy will progress 4.5% in 2011, immersed in a context of positive growth in all South American countries, as estimated by the Inter-American Development Bank (IDB). The report notes that growth and income per capita in the region could improve dramatically, with more credit, better transportation, simplified tax regimes and social policies designed to reduce labor informality.
The last ¨Situación Uruguay” report done by the BBVA financial group, studies the economic performance over the third quarter, and its prospects in the short and medium term. It concludes in an upward revision of the growth rate for this and the next year, leading to 6.3% from the previous 5.8%. This review also involves an increase for next year of 4, 5% originally forecast to 4.8% in 2011.
Regarding the public accounts evolution, the report projected that 2010 ends with increased primary fiscal balance, reaching 2.3% of GDP and a significant reduction in the total fiscal deficit of 1%.
It is expected that the total fiscal balance will continue to improve in 2011, settling at -0.7% of GDP. This will not be primarily based on the public companies improvements, but in a more efficient central government. The report adds that the systematic improvement of the primary surplus will allow Uruguay to have a gradual reduction in public debt ratios, 63.8% of GDP at the beginning of this year.
With a more active participation of the Ministry of Economy in the foreign exchange market, the government tries to avoid a greater appreciation of the exchange rate. In turn, consumer confidence remains at levels of optimism compared with the average of the last three years and marked a further 4% increase in the second quarter.
Uruguay’s exports jumped 23.3% during the first eleven months of 2010, anticipating a new value record for the year. Exports totalled 6.1 billion US dollars between January-November compared to 4.95 billion in the same period a year earlier and are higher than the twelve month previous record of 6.1 billion in 2008, according to Uruguay’s Exporters’ Union.
Uruguay’s main export item is beef, 17.97% (up 16.99% over the same period a year ago). Soy is the second item with 11.61% (up 53.58%) followed by grains, dairy produce and wood. Geographically, Mercosur, Chile and Venezuela absorbed 37% of all Uruguayan exports; Nafta (US, Canada and Mexico) 5%; the European Union 15%; free trade zones 14% and the rest of the world, 29%.
Brazil remains as Uruguay’s main trade partner having absorbed 21.25% of exports followed by the Free Zone of Nueva Palmira, 10.3% and Argentina 7.55%. However Portugal and Turkey figure as the two countries which experienced the greatest increase in the eleven month period, 411% and 185% respectively.
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