The Central Bank of Uruguay (BCU) foresees economic growth for Uruguay 4% in 2024 and 2025, after the economy closed with a slight expansion last year, mostly driven by a 1% increase during the third quarter.
The data comes from the Monetary Policy Report corresponding to the fourth quarter of 2023, which was released this Monday by the state body.
In this macroeconomic scenario, the BCU predicts that, in the Monetary Policy Horizon (HPM)private consumption will remain the main driver of growth in the country, along with the recovery of net exports in 2024 and investment in 2025.
Likewise, they estimate that the inflation will be within the target range throughout the HPM, and that this would be around 5.3% by December 2025.
Inflationary evolution will be guided by a contractionary or neutral monetary policy
The behavior of inflation within the target range would be guided by a contractionary/neutral phase monetary policy throughout the HPM, the action of the different transmission mechanisms and the policy coordination framework guided by the increase in administered prices and nominal wages compatible with the inflation objective.
The document points out that “this dynamic would occur within the framework of a gradual downward adjustment of inflation expectations”, which in turn “would be reflected in a lesser persistence of inflationary pressures on wages and non-tradable prices during the HPM”.
In turn, it is indicated that other macroeconomic factors would contribute to this evolution of inflation, such as moderate variations in the exchange rate and “the persistence of a Gross Domestic Product (GDP) gap in negative territory during the first part of the horizon.” projection”, which would close in the second half of the HPM.
Among the main risks to the level of activity, macroeconomic imbalances at the regional level stood out, and to a lesser extent geopolitical conflicts and the economic slowdown of China.
Regarding inflation, the greatest risks are associated with the non-convergence of the expectations of local agents, and financial events in USAor an escalation of geopolitical tensions at a global level.
Source: Ambito
