He Ceres Leading Index (ILC) rose 0.3% in the month of May, which represents the fifth consecutive increase, maintaining the positive trend of the economic activity so far this year, unlike what happened in the second half of 2022, the institution reported.
To calculate if the Leading Index, the Center for the Study of Economic and Social Reality (Ceres) uses a set of variables that consider the internal panorama and the international context, which tend to change direction before the country does. Gross Domestic Product (GDP).
Meanwhile, the Diffusion Index (ID) May was 60%, which shows that more than half of the ILC variables registered positive rates in the month. This indicator considers the proportion of ILC variables with positive rates.
From Ceres, however, they highlighted that economic activity has not managed to consolidate firm growth. “The drought history that hits the agricultural sector generated a downward revision of the official growth estimates for 2023. Despite this, and the drop in exports and lower tax collection, the actual salary it is above 2022 levels, which encourages domestic consumption,” said the monthly report.
This was also the first time that the Leading Index made reference to the situation of the Uruguayan coast in light of the exchange difference with Argentina. “Part of this consumption is derived to Argentina because of the attractiveness of the exchange differential”, he stressed.
The economy faces the consequences of the drought
In its March report, the Ceres Leading Index warned that the effects of the historic drought would be felt in the second half of the year.
In the May update, the center estimated that “the scenario continues with low forage availabilitybut these last rains give the sector a breather and allows it to gain kilos in the treasury, while it is waiting for the adverse effects to be added as a result of the approaching winter frosts”.
The cattle slaughter decreased by 21% compared to the previous year, which represents about 241,000 fewer animals. Activity in May was covered to a large extent by feedlot cattle, which caused a decrease in the demand for pasture cattle by the industry.
Meanwhile, the average export price of the last 30 days exceeded US$4,600/ton, the highest of the year. This shows a rising market, largely based on the concretion of sales at prices above the average for the concept of the export quota 481 to Europe, Ceres detailed.
while the rice harvest achieved record yields, the soy is about to end with historically low yields throughout Uruguay due to the drought.
Source: Ambito
