Businessmen see yellow lights due to the deterioration of the economy

Businessmen see yellow lights due to the deterioration of the economy

85% of businessmen Uruguay considers that the business climate continues to be positive in the country, but the yellow lights begin to turn on regarding the economic situation at the national level, within the framework of a situation that they understand to be increasingly less favorable.

This is demonstrated by the last Business Expectations Survey carried out by the consultant Exante, to which he agreed Ambit. The semiannual survey among more than 300 executives determined that the evaluation of the business climate, as of October 2023, continues to be “extraordinarily favorable,” with a 85% considering the context as “good” or “very good”. The remaining 15% understand it as “regular”, while none see it as “bad” or “very bad”.

What did show a deterioration is the perception of economy or its recent performance, something that has also been observed in previous surveys, as Exante pointed out in his report. In this way, although the change was mainly towards neutral responses that consider the economic situation “same” —48% against the 31% surveyed in April—; also increased the perception that the economic situation is worse than a year ago, from 19% six months ago to 23% current.

This response, together with the moderation, once again, of the expectations of growth of the Gross Domestic Product (GDP) with a horizon of three or four years—standing just above 2% annually—are signs of a less favorable situation for companies in Uruguay; in which both the international financial conditions more restrictive as the difficulties that remain in terms of competitiveness national.

Warning signs among entrepreneurs

Another aspect that turns on the yellow lights from the Exante survey is the new drop in expectations of additional climate improvements investments: In April, 23% of respondents still considered a more positive horizon, while in October, the number of optimistic responses was reduced to 13%.

The perception of improvement within companies was also reduced for the fourth consecutive time in relation to the situation a year ago. Although still 40% still see improvementsIn April this percentage was 47%. Likewise, the number of responses that see no changes increased by one point, while those who currently see a worse situation in their businesses increased from 15% to twenty-one%.

Along the same lines, almost a third of the businessmen surveyed perceive sales lower than expected for this year—mostly because of the drought and the exchange difference with Argentina. In any case, expectations for performance in the coming year remain, in general, positive; although they moderated slightly.

On the other hand, among the main challenges that companies face, Exante included the cost pressure as the most highlighted aspect, with 61% of the responses. “This is consistent with the situation of low competitiveness and poor growth that the economy has,” the report noted. Increasing competition, lack of demand and human resource management are also relevant challenges.

Despite this less optimistic situation, the evaluation of the government management of Luis Lacalle Pou remains extremely positive: 79% approve and only 3% disapprove. The balance is favorable in almost all management areas, but on this occasion an appreciable increase in positive judgments regarding the management of the inflation —94% positive responses compared to 69% in the previous relay—; and, on the contrary, a deterioration in the net balance of responses regarding the competitiveness —with a growth from 25% to 33% of those who rate it as “bad.”

Source: Ambito

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