MercoPress. South Atlantic News Agency

Uruguayan economy, second best performer in Latinamerica, forecasts IMF

A favourable external context favours dynamic growth

The IMF expects the Uruguayan economy to expand strongly this year, 8.5% and 5% in 2011 in a world framework which is experiencing the slow consolidation of recovery but still highly vulnerable.

For Uruguay the latest World Economic Outlook signals a significant leap from the previous estimates of April, 5.7% in 2010 and 2.9% in 2011.

“Uruguay, which has had substantial progress in the management of macroeconomic policy and faces a favorable external context, is expected to experiment a strong and dynamic growth in 2010 and 2011”, according to the report which describes the expansion as “above potential” and “moderating” towards the second half of the year.

Uruguay’s estimated GDP growth is the highest for the region behind Paraguay which is estimated to expand 9% in 2010. The other performers to complete the list of five top are Peru, 8.3%; Brazil, 7.5% and Argentina 7.5%.

The global economy is forecasted to expand 4.8% this year and 4.2% in 2011.

Regarding inflation, IMF estimates it will reach 6.5% this year and 6.4% in 2011. Both estimates were reviewed from April’s 6.2% and 6%.

IMF points out that “a fiscal tightening would help to address inflationary pressure risks”. The recommendation for Uruguay is extensive to Peru. IMF says the priority of the region should be to begin “withdrawing stimuli, recovering manoeuvre space and keeping to the relatively recent solid macroeconomic policy performance”.

As to unemployment IMF estimates that Uruguay in 2010 will end with a rate of 7% and in 2011 slightly lower, 6.9%.