Uruguay: GDP contracts at softer pace in Q3
According to rebased national accounts data released by the Central Bank on 17 December, with the new base year referring to 2016 prices, GDP dropped at a milder rate of 5.9% year-on-year in the third quarter, above the 12.5% contraction seen in the second quarter.
The third quarter’s improvement largely reflected the easing of containment measures. Household spending slid at a more moderate rate of 5.9% year-on-year in Q3 compared to a 13.0% contraction in Q2, while public consumption fell at a slower pace of 9.4% in Q3 (Q2: -13.1% yoy). Meanwhile, fixed investment rebounded, growing 0.1% in Q3, contrasting the 13.7% contraction recorded in the prior quarter.
On the external front, exports of goods and services dropped at a slower rate of 19.2% in Q3 (Q2: -22.4% yoy). In addition, imports of goods and services declined at a softer pace of 13.8% in Q3 (Q2: -21.4% yoy).
GDP should return to growth in 2021, after this year’s Covid-19-induced slump. A revival in demand from key trading partners should boost the external sector, while domestic activity is seen rebounding. Weak fiscal accounts, which have further deteriorated due to the health crisis, and uncertainty over the trajectory of the pandemic pose downside risks.