Uruguay Economic Outlook. Second Half 2014.

We do not expect any relevant changes in economic policy. Uruguay heading towards a soft landing, with a gradual decline in growth to 3.4% in 2014 and 2.9% for 2015, in step with a slowdown in private consumption. In spite of the fall in commodity prices, the current account deficit should start showing a gradual improvement, reaching -5.3% of GDP this year and -4.5% in 2015, given the contribution of Montes del Plata exports. We do not expect any changes in the fiscal accounts, with a repeat deficit of 3.4% of GDP in 2014 and 2015. Based on candidates' statements, we do not foresee any significant fiscal adjustments during the next administration. Inflation will remain above the CBU's target range, reaching 8.4% in 2014 and 8% in 2015. As the UYU is not immune to the international scenario of USD appreciation, the latter will trade at UYU24.4 at the end of 2014 and at UYU26.6 in 2015.

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