The Minister of Economy and Finance, lily arbelecheanticipated this Tuesday that the growth of the Gross Domestic Product (GDP) it will be of a modest 2% this year, almost 3 percentage points less than last year, as a result of the effects of the drought.
The hierarch communicated it at a conference of the Association of Marketing Managers (ADM), where she made a presentation in which she showed the contrast between the figures for 2022 and 2021 –5.3% and 4.9% respectively– and the projected for 2023.
“We have been able to respond to extraordinary factors, such as the pandemic”, “the increase in international prices that affected our country as a result of Russia’s invasion of Ukraine” and “as the drought is doing at the moment”, expressed the minister.
To the global context of falling growth after the rebound effect of the post-pandemic, meanwhile, is added the regional particularity of the drought. He Ministry of Livestock, Agriculture and Fisheries (MGAP) reported last month that the losses for the country because of water deficit would exceed $1.8 billion.
The news means a strong setback for the indicators of the Uruguay, that will be affected despite the hopeful projections that the pulp mill may provide PSU 2 in revenue, which is estimated at a 2% of GDP by the time it is fully operational in the second half of the year.
Even so, if the projections are fulfilled, the growth of the Uruguayan economy would not be far from potential growth planned, of 2.1%
The role of consumption in government projections
In his presentation, Arbeleche assured that GDP growth will be mainly driven by consumption of homes, something that is in line with the reduction in the Personal Income Tax (IRPF) and the Social Security Assistance Tax (IASS) in March.
Under the umbrella of orderly fiscal accounts, the tax relief implemented by the management of Luis Lacalle Pou was intended precisely as a strategy to encourage domestic consumption and thus keep the economy active.
The reduction, according to what the government said at the time, will imply that this money “saved” by the taxpayer will be used for internal consumption.
“This ordered policy allows us to respond to these events or episodes, it has allowed us not only not to increase taxes”, but also “it allowed us to lower taxes: this year we have lowered taxes for the equivalent of 150 million dollars”, Arbeleche detailed in his presentation this Tuesday.
Source: Ambito
