Uruguay will not reach growth Gross Domestic Product (GDP) 1% this year, despite the fact that this is the projection that the government presented in the Accountabilityaccording to the analysis of the economic team of the Center for Studies of Economic and Social Reality (Ceres) based on the latest data regarding the contraction of the economy released by the Central Bank of Uruguay (BCU).
“It surprised the magnitude of the fallnot that he fell GDP in the second quarter because it was expected due to the drought,” said the director of Ceres, Ignacio Munyo, in the Informal Breakfast program. The economist referred to the 2.5% year-on-year drop in GDP during the second quarter of 2023, mainly due to the drought and its negative effects on the agricultural sector, of fundamental importance for the economic balance of the country. “The blow was expected to be a little less,” he emphasized.
For this reason, the analysts’ projections were adjusted downward again, and are moving away from the 1% growth scenario of the GDP for this year proposed by the national government in the Accountability, which was not too optimistic about it either. “From our point of view and based on the analysis of the Ceres team of economists, We find it difficult to achieve growth of that magnitude.”, maintained Munyo.
“We are seeing an economy with weak growth, practically zero, throughout 2023, on average,” said the economist, adding that, due to this, “the growth of 2023 would be closer to 0 than 1”.
On the other hand, no “economic rebounds” are expected that could reverse this situation in a context marked by different problems at the level of public accounts: on the one hand, the improvement in the purchasing power of Uruguayans from the fall in inflation is being spent on Argentina due to the great exchange difference with the neighboring country; while, in turn, due to the decrease in GDP collection fallsbut the government public spending increases.
In this regard, Munyo said that “the fiscal situation of Uruguay It is a worrying situation.” “Let us be clear that in the last moving year, the last twelve months, spending has increased a lot, in addition to income having fallen, and the deficit is already at 4% of the GDP, magnitudes that we have been commenting on with concern for a long time when years have passed,” said the director of Ceres.
As an example, he explained that in the last twelve months, Public spending grew 3% above inflation. “It is the average level of growth that public spending had in the previous government. The last Vázquez administration had growth in its five years at the rate that spending grew in the last year of government here,” said the economist.
A stronger drop than expected
He GDP fell 2.5% during the second quarter when compared to the same period in 2022, a decrease driven by the effects of the drought and its negative impact on the agricultural sector, according to the Quarterly National Accounts (CNT) published by the Central Bank of Uruguay (BCU).
Furthermore, if economic activity is analyzed in seasonally adjusted terms, the drop was 1.4% compared to the first quarter of the year, when the GDP had increased by 0.9%, an occasion in which there was progress in almost all sectors.
In the productive sphere, the year-on-year falls in the sector stood out Agriculture, Fishing and Mining, with 27%, followed by Electric Power, Gas and Water, which reached 12%, all of them linked to the drought and the water crisis.
On the other hand, items such as Transportation and Storage, Information and Communications had a positive performance, with an increase of 2.5%; Professional Activities and Leases, with an improvement of 3.5%; and public administration activities, with an increase of 3.6%.
Source: Ambito
