Ceres stated that it is not yet possible to analyze how the country’s economy will continue, because it remained stable during the month of September. However, they warned about the situation, placing the main problems as the impact of the drought, The problems of competitiveness that affect exports and exchange difference between Uruguay and Argentina, which is felt especially on the coast.
The ILC is an indicator of Center for Studies of Economic and Social Reality (Ceres), that takes into account a set of variables that contemplate the internal panorama and the international context, which tend to change direction before the Gross Domestic Product (GDP), so it can give a signal of the trend of economic activity in real time.
For his part, the Diffusion Index (ID) September, which takes into account the proportion of variables with positive rates, was 33% last month, which shows that most of the variables fell during the month, but at rates of lower magnitude than those that grew, which resulted in a neutral record.
Problems to strengthen economic growth
From Ceres, they assured that the growth projections for 2023 have been revised downwards for months, so “the economy faces complications to consolidate a steady growth”. Among the main problems are the effects of the drought, “the competitiveness problems that affect exports, and the exchange differential with Argentina that hits local consumption and tourism, particularly in border departments.”
On the other hand, the construction sector was affected by the completion of the second plant of UPM, the drop in employment due to the construction of the Central Railway and the shutdown of the refinery ANCAP since September and for several months.
The agricultural sector continues to be hit
One of the premises of Ceres Index indicates that exports of goods fell 18% year-on-year in September, due to the fall in soy and bovine meat. Regarding the volume of slaughter, it accumulated 174,000 head in the month of September, 3.8% less than the same month of the previous year (close to 7,000 animals).
As for soybeans, in the month of September it went from placements of 68 million dollars in 2022 to 24 million dollars in 2023, representing 65% less, as a result of the negative impact of drought about cultivation. As a consequence of this, export income in 2023 will be less than 25% of the 2022 harvest.
Another factor that hits the agricultural sector It is the low competitiveness where the price of the dollar is more than five pesos below the January 2022 level, which fell from $44.6 to $39.1. In that sense, the real exchange rate (RER), that compares in the same currency the price level of the national economy and the main trading partners of Uruguay, shows a persistent decline where in the last 24 months the TRC had a decrease of 14.4% in the global index prepared by the Central bank.
Source: Ambito
