The loss of competitiveness is one of the main factors that keeps businessmen and different actors in the economy awake at Uruguaywhich centrally question the exchange rate delay as a factor, while insisting on the need to reduce logistics costs and improve insertion at the international level.
The economist of Economic Research Center (Cinve), Adrian Fernandezconsidered that “it is in the exchange rate that Uruguayan companies and economic sectors are having the greatest difficulties in terms of competitiveness”, when making a diagnosis of the situation in dialogue with scope.com.
For Fernández, “the important weight revaluationof almost 15% against the dollar in two years, while the inflation accumulates 16% in the same period”, represents “a serious problem, especially for the competitors of imports and the exporters that are not from commodities”
According to a long-term analysis by Cinve, what is relevant for the trend of Uruguay’s competitiveness is the price relationship with USA, where “the loss has not been so great due to the growth of international inflation.” This comparison is indicating an exchange rate lag close to 25%”, analyzed the expert, in line with other estimates.
In this regard, he indicated that “the monetary policy applied the Central Bank of Uruguay (BCU) has a direct incidence on this behavior of the dollar”. Although he admitted that it is not the only factor, he called it the main one.
At the same time, the economist referred to the considerable delay with the region, of the order of 60%, mainly due to the exchange difference with Argentina.
“It is independent of Uruguayan policy and has its genesis in problems in prices and exchange markets in Argentina,” he observed, while stressing that “it cannot be a guide for Uruguay’s monetary or exchange policy,” but that the The country must “wait for the measures” taken by the Argentine government in the coming months.
Exporters “pay for the loss of competitiveness”
Something similar remarked the president of the Union of Exporters of Uruguay (UEU), Facundo Marquezwho in statements to this medium assured: “I don’t know how long the government will want to continue tightening the exchange rate, because the only ones who are paying for this loss of competitiveness are the exporters.”
On this point, Márquez appreciated the low interest rate of the BCU, although he considered that the cut of 50 basis points was “the minimum” expected by the sector. When questioning the contractive monetary policy, he pointed out that “the argument is to lower inflation” and considered that to achieve this “it must be accompanied by medium and long term reforms”.
In this regard, he specified that “how indexed the economy is is part of the problem of deficit that Uruguay has” and deepened: “The costs in general that we have in the country mean that there is little competition. There is also the size of the market, the rates and the import permits of certain products, which affect production costs”.
The situation in the ports of Uruguay
For his part, the president of the UEU affirmed that a study by the entity showed that the costs of Port of Montevideo “they give us three and a half times more expensive than ports that compete with us”, such cases of Chili and Brazil. For this reason, he insisted on promoting the project to create a regulatory unit in ports to control costs.
Along the same lines, he ruled on the company’s decision Katoen Natiewhich tried to increase rates by 24% in the Cuenca del Plata Terminal (TCP). “When they announced it, all the alarm bells went off, because all the key players in the port have been meeting to see how we can lower rates and be more competitive,” he added.
The need for greater international insertion
In addition, Márquez called for the creation of “a working group to seek a clear international insertion strategy as a State policy”, which includes different sectors of the economy and is multi-party. and he asked maintain a presence in Mercosurbut also look at other markets.
“Uruguay has not managed to make any type of agreement, beyond specific access for certain products that are good, but we think of a more comprehensive agreement. Like the one you tried with Chinawith USA and the transpacific. They are very good agreements, but you have to work to make them a reality, ”she said.
In any case, he ruled out that he preaches a distancing from Mercosur. “For us it is very important, because close to 3.5 billion dollars of the total exports of goods go to Brazil and Argentina,” he graphed.
Not everything is exchange rate delay
Fernández, meanwhile, stressed that “Uruguay, together with Chile, shows a very favorable environment, in the regional comparison, for the investment and, in general, for the development of economic activities”, something that he associated with “the macroeconomic stabilitybut more broadly for respect for contracts and a tax regime oriented to the expansion of production”.
Among the aspects that can be improved to gain in terms of competitiveness, the Cinve economist spoke of “increase productivity of factors (labor and capital) and total productivity (the efficiency with which labor and capital are used), with long-term public policies”.
In turn, he focused on productivity changes that drive innovation and technological change“an area where important advances could be achieved with repercussions on productivity, but which require reforms in some controversial cases,” he analyzed.
Source: Ambito
