Uruguay: Decline in economic activity moderates in Q4
March 24, 2021
GDP fell 2.9% year-on-year in the fourth quarter of 2020, marking a softer contraction than the 5.8% drop logged in Q3. Taking the year as a whole, the economy contracted 5.9% in 2020, contrasting 2019’s 0.4% rise, as the effects of the pandemic and associated containment measures hampered activity.
The fourth quarter’s moderation reflected improvements in both the domestic and external sectors. Private consumption slid at a slower rate of 5.0% year-on-year in Q4 (Q3: -6.7% yoy), while government spending contracted at a milder pace of 5.7% (Q3: -7.7% yoy). Moreover, fixed investment bounced back, growing 11.8% and contrasting Q3’s 6.5% decrease.
On the external front, exports of goods and services declined at a more moderate pace of 13.5% in Q4, reflecting firmer foreign demand (Q3: -17.8% yoy). In addition, imports of goods and services fell at a milder pace of 7.2% in Q4 (Q3: -17.3% yoy).
Reflecting on the outlook for economic activity, analysts at the EIU noted:
“We expect real GDP to return to pre-pandemic levels by 2022—faster than many other countries in the region. […] The economic recovery will gather pace in the second half of 2021 as the vaccine rollout ramps up. In 2022, when the majority of the population will have been vaccinated and most restrictions will have been lifted, we expect real GDP to grow by 3%.”
Author: Hanna Andersson, Economist