He moderate optimism is the majority among companies Uruguay for 2024 that has just begun, with a favorable vision of the business climate and the conviction that sales will increase during this new year. The competitiveness, On the other hand, it continues to be one of the great concerns for the sector.
The consultant KPMG conducted a survey among directors, general managers and financial managers of more than 100 medium and large companies of various activities in the country, regarding the perspectives with which they face the new year at a business level.
In that sense, the Business Outlook Survey —surveyed between November 20 and December 19, 2023—revealed that the company leaders have a “moderate optimism” regarding the Uruguayan economic situation in the short term. Among the particular responses, 61% of those consulted said they have positive prospects, while only 5% expect a moderately worse situation.
This ratio —61% – 5%—, by itself, is already much better than that recorded in 2023, when the outlook was 42% – 21%; something highlighted by the consulting firm in its report.
In the medium term, and with respect to the expectations of real growth For the next three years, the majority of the businessmen consulted (77.5%) considered that it will be below 3%, in line with the trend of a “modest growth rate” that economic analysts warn. At the level of each particular firm, the projections are more favorable.
Also, the Internal market It is positioned as the destination with the highest expectations and most confidence: 70.5% of those surveyed expect their sales to increase in the local market while only 10.5% expect a drop. On the other hand, among companies that export, 50% expect an improvement in their sales compared to 5.4% that project a contraction. “In any case, expectations in net terms are favorable,” the KPMG report noted.
Inflation and exchange rate
Two topics of relevance in the KPMG study were the inflation and the exchange ratekey issues also for what the economy was like in Uruguay during 2023.
Regarding the first point, business expectations had “a notable change in relation to previous editions,” according to the consulting firm. In this way, and “for the first time, the majority of the companies surveyed (52%) think that inflation in 2024 will be within the target range between 3% and 6% drawn by the Central Bank (BCU). 15.7% think that it will even be below 5%, quadrupling the proportion reported in previous years.”
Regarding the expected evolution of the exchange rateexpectations are in line with those of the economic analysts consulted by the BCU in its own Survey of Economic Expectations (EEA) December: the median is located at dollar to 41.6 pesos at the end of 2024. In turn, “a relative majority of 30% thinks that it will be between 41 and 42 pesos, while the weighted average of the responses gives precisely a value of 41.6 pesos.”
What is expected from the business climate?
75.5% of those consulted considered that the business climate in Uruguay is “good” or “very good”, while only 2% rated it as “bad”. These results confirm the trend that has been observed for four years, although the positive percentage is below those recorded in previous years — with 82.1% in 2022 as the highest point achieved in this question.
Once again, and as is usual in this KPMG survey, the legal security topped the ranking of good perception with 94.1%, followed by macroeconomic stability with 93.1%, and the investment promotion regime with 84.3%. On the other hand, among the categories with the least favorable perception were Labor legislation with 23.5% negative responses, the tax regime with 20.6%, and the promotion of internal competition with 16.7%.
“In any case, all categories show a net positive perception. In particular, the ‘labor legislation’ category stands out, where for the first time, in more than 10 years, the number of companies that have a positive perception is greater than those that have a negative perception,” the report highlighted.
On the other hand, as in the previous edition, the variable that generates the greatest concern is the competitiveness, explained by the increase in dollar prices that the Uruguayan economy had in recent years and the price gap with Argentina. The regional situation, linked to the economic crisis of the neighboring country, appears as the second most important variable; followed by the fiscal deficit, inflation and the world situation.
Source: Ambito
