The Ceres Leading Index changed 0% and showed a tie in the country’s economy, with good news counterbalanced by negative economic situations.
He Ceres Leader Index (CLI)the leading indicator of the level of economic activity prepared by the Center for Studies of Economic and Social Reality (Ceres)remained stable with zero variation (0%) in July, after registering nine consecutive months of increase.
According to the report, the domestic consumption —from the adjustment of prices in Argentina which reduced shopping trips to the neighboring country—and the real wage bill showed significant improvements, but the real average household income did not grow with the same intensity, “which indicates a stagnation in the profits and income of Uruguayan owners and merchants.”
Also noteworthy is the recovery of the exports Regarding what happened in 2023 and the importance of the start-up of the second plant UPM, which made cellulose the main product for international placement; a situation that is counteracted by the low commodity prices in world markets and the high production costs faced by the agricultural sector. Added to this are the reduced profit margins due to the exchange rate lag situation, which Central Bank of the Uruguay (BCU) acknowledged around 15%.
For its part, the Diffusion Index (DI)which indicates the proportion of the ILC components that grew in the month, was 55% in July, meaning that more than half of the variables that compose it grew during the month. It is also worth remembering that the previous month, this index was 70%.
A tie between economic conditions
The explanation for the first negative result of the ILC so far this year is found in a tie or neutralization of positive situations for the economic activity such as, for example, the normalization of climatic conditions and the recovery of exports; with the scenario of loss of competitiveness of the agricultural sector in the face of an unfavorable exchange rate – although the rise in the nominal dollar rate In recent months, the exchange relationship with the main commercial partners of Uruguay- and the weakness of commodity prices in international markets.
The Ceres report also points out that, although the adjustment in Argentina helps to normalize the bilateral trade, This also has negative impacts on the country: “the recessionary scenario conditions the inbound tourism and shopping in Uruguay, while outbound tourism remained strong towards foreign destinations,” he notes.
This is also added to the moderation in the expectations of the summer harvest due to the excessive rainfall that marked the beginning of autumn, and the maintenance stops that affected the usual productions of Ancap and the three pulp mills in the country.
“Without observing a dynamism marked in the national economy, growth expectations for the year were revised downwards, and the ILC reported its first non-positive data in 2024,” the report concluded.
Source: Ambito
