Uruguay’s economy suffers slight deceleration in 2Q but on track to the 4% target
The Uruguayan economy experienced a slight deceleration in the second quarter of this year, but with an overall positive evolution. GDP increased 0.8% over the previous quarter and 3.8% over the same quarter a year ago, according to the latest release from the Central bank.
The increase in economic activity is supported by a better performance of Construction (22.3% in the last twelve months), plus transport, storage and communications (7.6%), while electricity, gas and drinking water experienced a strong contraction because of the several months-long drought.
Domestic demand has been the main factor boosting the economy with final consumption expenditure increasing 5.8% and gross capital investment, up 18.8%. Meanwhile imports expanded 13.2% and exports, 0.1%, widening the trade deficit gap.
In the first half of the year, Uruguay’s GDP expanded 4%, which is above the 3.41% from private estimates based on the regular survey of economic expectations from the Central bank.
If the current trend sustains, it will be three consecutive governments that have seen the Uruguayan economy expand running: the last two years of former president Jorge Batlle who cleared the mess of the 2002 financial crash (contagion from neighbouring Argentina), the five of former president Tabare Vazquez and the first two years of President Jose Mujica.
Uruguay’s GDP evolved as follows, 5% in 2004; 7.5% in 2005; 4.1% in 2006; 6.5% in 2007; 7.2% in 2008; 2.4% in 2009; 8.9% in 2010 and 5.7% in 2011.
Commenting on the results Finance Minister Fernando Lorenzo.a said that at this rate, “2012 GDP could end above the target of 4%”. He added that in the second quarter the Uruguayan economy suffered the full impact of the Argentine imports’ restrictions plus the drought that had a negative influence on power generation.
However “we can anticipate better signals for the third and fourth quarter from the region, particularly Brazil that is picking up”, estimated Lorenzo.