11/20/2012

Uruguay Economic Outlook. Second Half 2012

* In 2012, growth is expected to slow in line with estimates and should close at 3.8%. In 2013, GDP should continue to be fuelled by internal consumption and grow 3.9%

* This year, energy purchases by the Public Sector have a negative impact on the current account (-3.3% of GPD) and also increase the fiscal deficit, which would reach 1.9% of GDP. In 2013, the current account would be expected to improve as the energy problem is not expected to be repeated. However, the fiscal result (-1,9% of GDP) would remain compromised by incipient growth in current expenses

* Inflation of 8.7% in 2012 and the dilemma of the strengthening Uruguayan peso, mean that unorthodox solutions must be found to the lack of contraction in the fiscal balance and the inertia seen in real salaries

* The strengthening of the peso should slow in 2013, but in order to improve competitiveness in the mid term measures need to be taken to boost productivity