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Montevideo, September 21st 2018 - 06:14 UTC

Uruguay could be heading to recession because of the government's political stalemate

Friday, December 4th 2015 - 05:33 UTC
Full article 3 comments
Uruguay costs are too high; social disorder; unions overwhelming power and above all the lack of political power to make decisions, said Protasi (Pic El Pais) Uruguay costs are too high; social disorder; unions overwhelming power and above all the lack of political power to make decisions, said Protasi (Pic El Pais)
It is also possible that more investments decide to move to Argentina now that the Kirchners are out and business friendly Mauricio Macri is taking over It is also possible that more investments decide to move to Argentina now that the Kirchners are out and business friendly Mauricio Macri is taking over
And in the immediate “Uruguay needs to adjust its real exchange rate to gain competitiveness and cut government spending”. And in the immediate “Uruguay needs to adjust its real exchange rate to gain competitiveness and cut government spending”.

Uruguay faces seven conditions which are creating a complex scenario and if they are not modified by government, it's most possible the economy is heading for a recession, according to economist Juan Carlos Protasi, a former central bank president.

 Protasi made the statement at an event organized by Uruguay's Chamber of Industry under the heading of “Economic prospects and risks management”.

In a complex scenario where there are external factors such as a slowing of the global economy, the strengthening of the US dollar in international markets, the drop in commodities' prices and the outflow of capital from emerging economies, equally significant are Uruguay's conditions, indicated Protasi.

“We're in quite a complex situation: Uruguay costs are too high; social disorder; unions overwhelming power; a drop in production and exports; less jobs; business discouragement and above all the lack of political power to make decisions. If these conditions are not addressed and changed it is most possible that Uruguay ends in recession”

Among other negatives factors Protasi mentioned that investment is falling which means a “confidence problem” and this can be seen with several international corporations which are abandoning the country fearing a change in the rules of the game.

”It is also possible that more investments decide to move to Argentina now that the Kirchners are out of office and business friendly Mauricio Macri will be at the Casa Rosada“.

And in the immediate ”Uruguay needs to adjust its real exchange rate to gain competitiveness and cut government spending”.

According to the latest official stats the budget deficit was climbing and is close to 4% of GDP and growth estimates are closer to 2% than 3%.

Protasi warned that in the short term it is difficult to see a change to favorable conditions in world markets, nor in Mercosur main partners, Brazil and Argentina, for the next two years.

Finally the former central bank president said that Uruguay's GDP can be expected to further contract, although with certain contention if the infrastructure and public works programs announced by the government are in effect implemented.

Categories: Economy, Politics, Argentina, Uruguay.

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  • ChrisR

    I have to agree with Protasi as I have been saying this for four years, once I understood what a profligate spender 'No Money Pepe' was.

    Listening to his harridan wife La Tronca (the tree trunk - so apt) was his first mistake and thinking he knew better than anybody else was his second.

    In El Pais this week it has just come to public knowledge that the budget this fucking arsehole 'presided' over is now 7,000 MILLION UY Pesos in the red! There are only 3.3 million of us in the country.

    Mujica has stated the takes full responsibility for that. Perhaps he is going to sell his crap VW beetle for the stupid 'offer' that somebody made last year and pay it into the Central Bank. Yeah, that will square things: not.

    The one thing that cannot be overcome in less than a full generation is the abysmal state of education due to the fucking around of the system by virtually every president they have had.

    Quite how inexperienced Broad Fraud appointees think they now WTF they are doing just escapes me. I have several senior school teacher friends and they are all pulling their hair out with the level of idiocy that comes out of the so called 'Education Department'. It is even worse than the UK fuck-ups under the super-idiot Gove.

    Without an educated AND motivated workforce no international investors are going to risk their money in Uruguay.

    Dec 04th, 2015 - 12:01 pm 0
  • chronic

    Poor Your-a-guava! lol. How's that labor union thing working for you?

    Dec 04th, 2015 - 04:15 pm 0
  • ChrisR

    @ 2 chronic

    I have no idea what you mean.

    What has a pink fruit got to do with anything?

    Dec 04th, 2015 - 06:25 pm 0
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