Uruguay Economic Forecast

Uruguay Economic Outlook

December 4, 2018

Available data for the second half of the year has been downbeat and suggests that economic turmoil in neighboring Argentina has taken its toll on growth. On the heels of an otherwise solid first-half outturn, deteriorating external demand—from Argentina and Brazil, in particular—is expected to have hammered exports in the third quarter, compounding low agricultural output due to the drought-stricken harvest. In turn, household spending is likely to have landed on its back foot; unemployment spiked in the quarter and elevated inflation continued to weigh on consumers. Moreover, industrial metrics fared poorly through the quarter and hint that the second quarter’s rebound in fixed investment might have been a one-off. In October, Fitch Ratings revised the outlook on its investment-grade credit rating to negative, putting the government on notice over its rising public-sector debt. Analysts were quick to point out that next year’s budget will provide little remedy.

Uruguay Economic Growth

Dark clouds are on the horizon; the economy faces considerable downside risks next year amid the ongoing tumult in Argentina and, more broadly, a feared pullback in global trade. Meanwhile, domestic demand should remain upbeat although any rebound in fixed investment is expected to be modest. Fiscal slippage remains a key concern heading into next year’s vote and a consequent credit-rating downgrade, in turn, would only exacerbate the government’s fiscal woes. FocusEconomics analysts see growth at 1.9% in 2019, down 0.1 percentage points from last month’s forecast, and 2.6% in 2020.

Uruguay Economy Data

20132014201520162017
Population (million)3.43.53.53.53.5
GDP per capita (USD)16,86016,79215,57514,94317,177
GDP (USD bn)57.557.253.352.460.0
Economic Growth (GDP, annual variation in %)4.63.20.41.52.7
Consumption (annual variation in %)5.53.0-0.50.14.4
Investment (annual variation in %)3.82.4-9.2-1.6-15.5
Industrial Production (annual variation in %)4.11.13.10.3-11.1
Unemployment Rate6.56.67.57.97.9
Fiscal Balance (% of GDP)-2.3-3.5-3.6-3.9-3.5
Public Debt (% of GDP)57.558.658.963.664.5
Money (annual variation in %)15.03.75.68.415.0
Inflation Rate (CPI, annual variation in %, eop)8.58.39.48.16.6
Inflation Rate (CPI, annual variation in %)8.68.98.79.66.2
Inflation (PPI, annual variation in %)10.66.6-1.95.4-  
Benchmark Interest Rate (%)7.357.176.946.585.56
Exchange Rate (vs USD)21.1324.3729.9129.3328.83
Exchange Rate (vs USD, aop)20.4123.2127.3130.1428.66
Current Account (% of GDP)-3.4-3.1-0.80.81.5
Current Account Balance (USD bn)-2.0-1.8-0.40.40.9
Trade Balance (USD billion)1.81.61.20.60.0
Exports (USD billion)9.19.17.77.07.9
Imports (USD billion)10.910.88.97.67.9
Exports (annual variation in %)4.10.7-15.9-8.912.7
Imports (annual variation in %)-1.2-1.2-17.4-14.03.5
International Reserves (USD)16.317.815.613.416.0
External Debt (% of GDP)65.070.480.276.664.5

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Uruguay Facts

ValueChangeDate
Exchange Rate32.220.24 %Dec 12

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