Published on Wednesday, June 1, 2022

Uruguay Economic Outlook 2022

Summary

In 2022 the activity in Uruguay will grow 4.7%, with an important statistical contribution that leaves the 4T21 and the contribution of investment, external demand and consumption to a lesser extent. The conflict in Europe has a moderate net positive impact through the rise in commodity prices for now.

Key points

Key points:
The global economy will slow more than expected. After expanding 6.1% in 2021, global GDP is projected to grow 3.9% this year and 3.6% in the following year. Inflationary pressures are mainly accelerated by commodity prices and supply bottlenecks.
The fiscal result will show an improvement due to expenditure restraint and a lower allocation of COVID items, while revenues will increase due to greater activity. This year the fiscal deficit will stand at 3.2% of GDP (-4.1% in 2021).
The current account will reach a deficit of 1.6% of GDP. The increase in the price of agricultural commodities exported by Uruguay will be partially offset by the increase in the price of oil.
Inflation, which added up the impact of international commodity and logistics prices, will reach 8.3% in 2022 and 7.0% in 2023. The CB will maintain its commitment against inflation and raise the monetary policy rate to at least 10.5%.
Sustained by sound macroeconomic fundamentals, the peso adds the effect of high commodity prices and monetary policy. By December 2022, the exchange rate will reach UYU/USD 42.1. By adjusting for inflation, the real exchange rate remains above the pre-pandemic level.