Uruguay: Economy accelerates; domestic demand and external sector both improve
December 23, 2016
Uruguay’s economy expanded 2.0% year-on-year in Q3 2016, which represented an acceleration over Q2’s revised 1.5% growth (previously reported: +1.4% year-on-year) and marked the highest result in 6 quarters. The acceleration was driven by an improvement in both domestic demand and the external sector.
Private consumption improved marginally, accelerating from Q2’s 0.6% increase to a six-quarter high of 0.7% growth in Q3, and government consumption also strengthened, from a 1.0% expansion in Q2 to 1.5% growth in Q3. On the downside, fixed investment lost considerable strength, growing 2.8% in Q3, from the 17.4% increase recorded in the second quarter—which had been heavily influenced by a sharp but episodic surge in public investment in wind farms. The reading was the result of growth in private investment more than offsetting a drop in public investment, which was dragged down by a fall in construction activity.
Exports swung from Q2’s sharp 7.4% fall to a 1.2% expansion in Q3, on the back of higher external demand for food products. At the same time, imports swung and declined 0.2% in Q3—mainly as a result of lower imports for intermediate goods and a drop in outbound tourism—which contrasted Q2’s 2.2% mild expansion. As exports grew while imports contracted, the external sector’s contribution to growth improved, despite remaining negative overall.
On a quarter-on-quarter basis, the economy expanded 1.1% in Q3 in seasonally-adjusted terms, which came in above the revised 0.2% expansion logged in Q2 (previously reported: 0.0% quarter-on-quarter).