Following on an 8.5% growth rate in 2010, Uruguay’s real GDP continued to expand 6.8% in the first quarter of this year compared with the same period of 2010, according to the Central bank Debt Management Unit.
On a seasonally adjusted basis the level of activity grew 2.3%, over the fourth quarter of 2010, which means 2011 has an inertial “floor” of 4.4%.
In 2011Q1 domestic demand continued underpinning real growth with an increase of 8.3% in consumption and 13.3% in Fixed Investment. As real imports registered a high real growth compared with exports, there was a negative effect of the net sales over the GDP growth.
Construction, Commerce, and Manufacturing sectors were the most dynamic sources of growth. Since then private analysts reviewed upwards their 2011 real growth estimates to 6.3% in June from 5.9% in May, according to the monthly survey published by the Central Bank (CB). For 2012 the analysts foresee an expansion of 4.6%.
During 2011Q1, primary activities increased 2.7% and the inter-annual rate was 4.1%, driven by both livestock production and agriculture. In livestock there was an increase in animals’ weight of live cattle exports plus greater dairy production.
Agriculture was boosted by the good performance of the rice harvest partially offset by a reduction of corn and soybean crops.
Manufacturing increased 2.9% and 3.9% on an inter-annual basis, mainly boosted by the pulp-paper, dairy, and transport equipments sectors.
Additionally, the construction sector posted a new significant increase of 0.8% and 7.2% year to year, boosted by private investment, which offset the fall of construction from public sector.
Commerce, Restaurants, and Hotels recorded a strong growth of 4.4% and 14.9% (inter-annual rate). The performance was sustained on car sales, imported products for intermediate use, and restaurant services.
In contrast, electricity, gas, and water sectors registered a decrease of 12.0% in 2011Q1 and fell 51.4% compared with the same period of 2010. Basically, this result was explained by the higher production of electric power using thermal generation against hydraulic generation due to lack of rain.
On the expenditure side, the increase in the level of activity was explained by the strong growth of domestic demand. Private consumption grew in the first quarter of 2011 at an inter-annual rate of 9.3% explained by an increase in automobile sales and semi-durable consumer goods. Public consumption, in turn, grew only 2.5% in the same period.
Exports of goods and services raised 14.7% in real terms during 2011Q1 pushed by auto parts production and tourist services. Regarding the latter item there was a significant inflow of tourists from Argentina due to the opening of the international bridges shared by Argentina and Uruguay after the resolution of the long pending pulp mills conflict.
Fixed investment increased 13.2% in real terms mainly driven by investment in the private sector (14.8%), in machinery and equipment for the primary sector.
Investment in the public sector rose 5.7% due to the incorporation of machinery and equipment related to an infrastructure project for developing an electrical interconnection with Brazil.
A number of leading indicators confirm that the Uruguayan economy will continue on a positive growth path during the second quarter of 2011.
According to the private think tank Ceres, the level of activity increased 0.1% in April posting a twenty-third consecutive month of growth.
Tax collection in May grew 6.2% in real terms compared with the same year of 2010.
The unemployment rate was 6.6% in April, after tumbling to a record 5.4% in December. In the year ended in April 2011 the average jobless rate was 6.6% which compares positively to the 6.7% in 2010 and 7.3% in 2009. A private analysts’ survey by the CB foresees an increase of 1.9% in labour force for 2011.