Skyline at night in Uruguay

Uruguay GDP Q1 2021

Uruguay: Decline in GDP softens somewhat in Q1

GDP fell at a slightly milder pace of 2.8% year-on-year in the first quarter, following the 2.9% contraction seen in Q4 2020.

Q1’s reading largely came on the back of a pickup in fixed investment, which expanded 14.5% on an annual basis, following Q4’s 11.8% rise. Moreover, public expenditure rebounded, growing 4.6% after contracting 5.7% in Q4, while the decline in private consumption moderated to 4.2% from 5.0% in the previous quarter.

On the external front, exports of goods and services contracted at a somewhat softer rate of 13.3% year-on-year in Q1 (Q4 2020: -13.5% yoy). In addition, imports of goods and services fell at a milder pace of 4.7% in Q1 (Q4 2020: -7.2% yoy).

Commenting on the near-term outlook for the Uruguayan economy, Diego W. Pereira and Lucila Barbeito, analysts at JPMorgan, reflected:

“We assume the meager activity performance is to linger into Q2 2021 […]. Of note, the country has experienced the worst of the pandemic in the second quarter of the year, as illustrated by the plunge in mobility observed in April. That suggests additional erosion to commerce and other services than the one observed in Q1 2021, despite tourism-related sectors playing less of a role than in the first quarter of the year. That said, we expect net exports to start contributing positively, in part offsetting the domestic demand blues.”

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