Uruguay: Uruguayan economy accelerates on robust fixed investment in Q2
September 21, 2016
Uruguay’s economy expanded 1.4% year-on-year in Q2 2016, which represented an acceleration over Q1’s revised 0.1% growth (previously reported: -0.5% year-on-year). The improvement was mainly driven by a solid jump in fixed investment and to a lesser extent by a slight recovery in private consumption. Government consumption continued to expand but at a softer pace, and the external sector performed notably worse than in Q1.
Fixed investment recorded the strongest expansion in almost four years, growing a notable 16.7% in annual terms (Q1: -22.0% yoy). The result was heavily influenced by a dramatic increase in public investment, driven by the construction of wind farms. Private consumption also improved, swinging from Q1’s 0.4% decrease to a 0.2% increase in Q2, while government consumption slowed from a 1.3% expansion in Q1 to a softer 0.6% growth in Q2. The reading marked the slowest pace of growth on record.
Exports swung from Q1’s 2.2% increase to a 7.2% fall in Q2, marking the worst reading in nearly four years. At the same time, imports rebounded and recorded the best result in two years. They grew 1.6% in Q2—mainly as a result of the purchase of equipment for the installation of wind farms—which contrasted Q1’s 17.4% decrease. As exports contracted while imports grew, the external sector’s contribution to growth swung from plus 25.1 percentage points in Q1 to minus 9.9 percentage points in Q2.
On a quarter-on-quarter basis, the economy recorded flat growth in Q2 in seasonally-adjusted terms, which came in below the 0.5% expansion logged in Q4.