Uruguay: Uruguayan economy falls deeper into contraction in Q1
June 25, 2016
Weakness in the domestic economy prompted Uruguay’s very open economy to contract 0.5% year-on-year in Q1 2016, which was down from Q4 2015’s 0.1% drop. The deterioration was mainly driven by a drastic deterioration in fixed investment as well as shrinking private consumption. Public spending continued to support the economy despite a slowdown, and the external sector performed notably better than in Q4.
Fixed investment recorded the steepest contraction on record, falling a staggering 22.1% in annual terms (Q4: -11.3% year-on-year). Private consumption also deteriorated, swinging from Q4’s 0.4% increase to a 0.8% decrease in Q1. Public spending slowed from a 1.8% increase in Q4 to a softer 1.3% growth in Q1. The reading marked the slowest pace of growth since Q3 2006.
Exports rebounded from Q4’s 3.0% decrease and expanded 1.8% in Q1, marking the largest reading in a year. At the same time, imports plunged and recorded the largest drop since Q2 2009. They fell 24.7% in Q1, which was down from Q4’s 9.1% decrease. As imports contracted sharply while exports recovered, the external sector’s contribution to growth jumped from 8.7 percentage points in Q4 to 24.7 percentage points in Q1.
On a quarter-on-quarter basis, the economy grew 0.1% in Q1 in seasonally-adjusted terms, which came in above the flat reading recorded in Q4.