The government and the local and international market foresee different growth scenarios for economic activity.
He Central Bank of Uruguay (BCU) reported the growth data of the Gross Domestic Product (GDP) of the country during the first quarter, and the result was better than expected —compared to the same quarter of 2022—: it increased by 0.9% compared to the end of last year. This happens in a context in which the government and most of the country’s and world’s financial organizations expect a slowdown in the Uruguayan economy this year.
In this sense, the national authorities are the first to point out that GDP will not grow as much as it did last year —5%—, mainly affected by the drought history that still hits the country and that had a major impact on the agro-export sector. According to the minister of Economy and Finance (MEF), Azucena ArbelecheGDP growth would drop almost 3 points due to the water deficit, so the government’s growth estimates for this year are just 2% —potentially 2.1%.
For its part, the last Economic Expectations Survey of the BCU, corresponding to May, indicates that the variation of the GDP for this year will be 1.45% —according to the median of the responses issued by the economic analysts consulted. This projected result is slightly worse than that estimated in April, when the median was 1.5%.
At the local level, it is Economic Research Center (Cinve) which estimates a more stagnant scenario, with a national GDP growth of just 1% by 2023pressured downwards mainly by the extreme impact of the drought.
What do international financial organizations project?
He International Monetary Fund (IMF) It is the organization that has the best expectations for Uruguay, in line with government projections. In this sense, it estimates a GDP growth of 2% for this year, with the drought as the protagonist of the slowdown; although in his analysis he maintained “uncertainty” as a factor that could modify the final figures.
For his part, he world Bank projected a growth of 1.8% for the country in a context of slowdown in the entire Latin American region, also with the effects of the water deficit on export production as the main reason for the worse performance of economic activity compared to last year.
Finally, the ECLAC adjusted its forecast for Uruguay downwards, going from a possible growth of 2.9% for this year projected in December to one of the 2%. In this way, it remains in tune with the IMF and with the perspectives of local authorities.
In the case of financial companies, the estimates vary quite a bit although, in general, they are close to the other projections. In this way, the agency Fitch Ratings estimates a growth of the Uruguayan GDP of 2.1% in 2023, while Moody’s forecasts an increase of 2% and Euromonitor, of 1.8%. In case of JP Morgan is the most pessimistic, with a growth forecast of just 0.4%.
Source: Ambito
