Uruguay: Economy records best reading since Q3 2022 in Q4
GDP rebounded, increasing 2.0% year on year in the fourth quarter, contrasting the 0.2% contraction logged in the third quarter. Q4’s reading marked the best result since Q3 2022. On a seasonally-adjusted quarter-on-quarter basis, economic growth improved moderately to 0.4% in Q4, following the previous quarter’s 0.1% increase. Q4’s reading marked the best result since Q1.
The improvement in the year-on-year performance of the economy came mainly on the back of a more supportive external sector.
Exports of goods and services increased 8.9% on an annual basis in the fourth quarter, which contrasted the third quarter’s 8.6% contraction. Conversely, imports of goods and services growth slowed to 3.1% in Q4 (Q3: +4.8% yoy), marking the worst reading since Q4 2022.
On the domestic front, private consumption growth moderated to 2.8% year-on-year in Q4 from a 3.9% expansion in Q3. Government consumption dropped at the sharpest pace since Q3 2023, contracting 0.6% (Q3: +0.4% yoy). Fixed investment contracted at a slower pace of 10.2% in Q4, from the 10.8% decrease in the previous quarter.
Commenting on the outlook, analysts at EIU stated:
“Real GDP will grow firmly in 2024 as a bumper crop boosts agricultural and industrial production. Monetary policy easing will encourage investment. Rising real salaries and employment growth will support private consumption. A greater than expected economic contraction in Argentina poses downside risks to forecasts.”