The Japanese credit agency maintained a stable outlook regarding Uruguayan debt and expects growth by 2024.
The Japanese credit agency, Rating and Investment (R&I) ratified the qualification of the Uruguayan debt in BBB+, maintaining a stable outlook and highlighting the government’s commitment to fiscal discipline and ensuring that starting next year a steady growth.
“Uruguay It is a high-income country that stands out among South American countries in terms of institutional and political stability“, states the report of the Japanese agency. Meanwhile, although they noted that the country’s economy has been slowing down, firm growth is expected to begin in 2024.
On the other hand, they highlighted that “thanks to the government’s strong commitment to maintaining fiscal discipline, such as the continuous fiscal management policy in accordance with fiscal regulations, the public debt ratio has been controlled.” While external stability was maintained thanks to the fact that the current account deficit is supported by capital inflows focused on foreign direct investments. All these factors added up to make the rating of R&I be BBB+.
Recovery from the pandemic
The report establishes that from the economic contraction generated by the global pandemic of COVID-19, the economy managed to grow steadily since 2021 and recorded a growth rate of around 5%. However, the harvest of crops such as soybeans decreased in 2023 due to the drought, which caused a decrease in exports.
With this, and although private consumption remains unchanged, the growth rate of real gross domestic product (GDP) for the entire year is expected to slow between 0.5% and 1.0%. However, the economy is expected to expand from 2024, thanks to the recovery of the agricultural production and exports from the second pulp mill in UPM-Kymmene Corp. For their part, they recalled that the International Monetary Fund (IMF) projected a growth rate of 3.3% for Uruguay.
“With the reputation of being the most stable country in South America both politically and socially, the expansion of private investment will support economic growth in the medium term,” the report noted.
Source: Ambito
