Uruguay: Growth edges up despite regional turmoil
September 17, 2018
Annual growth ticked up to 2.5% in the second quarter, above the first quarter’s 2.2% expansion but just below analysts’ expectations. Despite the acceleration in annual terms (on account of favorable calendar effects), sequential data was less flattering, and it seems the economy has begun to creak under accumulating regional uncertainty.
Domestically, fixed investment rebounded in the second quarter (Q2: +0.8% yoy; Q1: -2.5% yoy). That said, private-sector fixed investment remained in the doldrums. Moreover, government spending also rebounded modestly (Q2: +1.5% yoy; Q1: -0.1% yoy). Meanwhile, year-on-year household spending continued to decelerate, easing to 2.5%, a six-quarter low following Q1’s 2.8%, amid surging inflation and a deteriorating labor market.
On the external front, exports contracted sharply from a year earlier (Q2: -6.7% yoy; Q1: +4.2% yoy) as external demand waned in crisis-stricken Argentina. This year’s poor soybean harvest, as well as the currency’s overvaluation, have also taken their toll on exports. Imports, meanwhile, accelerated and grew 5.6% from a year earlier (Q1: +3.7% yoy).
On a quarter-on-quarter basis, the economy broadly stagnated, growing only 0.2% in seasonally-adjusted terms, down from the first quarter’s 1.0% expansion.