He international context was one of the factors that influenced a meager economic growth of Uruguay during 2023, although the situation of the drought history and its effects, as well as the exchange difference with Argentina he consumption diversion towards the neighboring country—in terms of impact on employment, spending and revenue in the national territory—were the ones that had the most impact. In that sense, the Background International Monetary Fund (IMF) carried out a review of the world scenario that can also bring positive news for the development of the country.
As noted Tamara Schandy, partner of Exante, In the analysis he carried out on the radio program En Perspectiva, the review of the IMF, Although positive, it was not of significant dimensions either: a growth in Gross Domestic Product (GDP) expected in October of 2.9%, an increase of 3.1% was now projected during 2024. In 2025, however, the same perspectives of 3.2% were maintained.
He “soft landing” After the recovery processes after the Covid-19 pandemic and its effects on the world’s economies, it will be the protagonist, and that also means the appearance of “several positive notes” for Uruguay, according to the specialist.
Three positive aspects for Uruguay
United States, China and Brazil They were the three cases with upward revisions that Schandy highlighted for their positive impact on the Uruguayan economy, especially considering last year’s scenario.
In the case of USA, “economic activity has shown itself to be quite resilient despite the cycle of aggressive monetary adjustment” carried out by the government of that country through the monetary policy of the Federal Reserve (Fed); something that is reflected in an average annual growth of 2.5% in 2023, firm consumption and a good level of investment that accompanied a considerable drop in inflation that is close to the objective of the US central bank.
“All this cleared up fears of very extreme scenarios and earned the United States an upward revision of the growth forecast for 2024 of 6 tenths, going from 1.5% to 2.1%,” explained the Exante partner.
It is worth remembering that, in 2023, the Central Bank of Uruguay (BCU) raised to 0.75% the countercyclical capital buffer —an increase of 0.25%— given the risks of recession in the United States and the consequences that this could have on the local dollarized market. Likewise, the behavior of dollar —with a downward trend— strongly affected the competitiveness of Uruguayan products.
In the case of China, the forecast of IMF It went from a growth of 4.2% for this year to 4.6%. “This correction is mainly due to the expected support measures from the government to support the economy, especially with a boost to consumption and certain sectors that are experiencing significant deterioration, such as the real estate sector,” Schandy considered.
For Uruguay, a reactivation of the Chinese economy —after a 2023 low demand that directly impacted foreign trade income—is good news in terms of exports. In any case, attention is focused on a possible deflation scenario in the Asian giant after registering the smallest price variation in 14 years; and this continues to weaken the demand for local products.
Finally, the third positive aspect is the region, represented by Brazil, which had a correction of 1.5% to 1.7%. The neighboring country is an important trading partner and one of the drivers of trade in the Mercosur, Therefore, its recovery and growth is always good news for the national and regional economy.
A great year for Uruguay?
Although the upward revisions of important economies in the world mean some relief after a 2023 marked by a rather negative international context, this does not mean that 2024 will represent an extreme rebound.
“Some have been cleared risks of very negative scenarios,” Schandy noted in his analysis, “although it is not a scenario to expect much external impetus for Uruguay”.
Among the positive points, he pointed out the containment of global inflation, expectations of moderate growth in the world and the possible flexibility of financial conditions which is already beginning to be seen in, for example, the fall in long-term US bond rates.
On the contrary, the Exante partner pointed out that “the prices of several commodities had significant falls at the end of last year and when looking at the futures, the market does not incorporate large rebounds this year.”
“I would say that in principle a relatively benign overall outlook for Uruguay, but that continues to pose challenges to us: high global rates (although they are beginning to fall), the strength of the dollar at a global level (which exacerbates our competitiveness problems) and a growing but weak global demand. These are all elements that make us predict that it will be difficult Uruguay have a lot of tailwind pushing it in 2024,” concluded the specialist.
Source: Ambito
