MercoPress. South Atlantic News Agency

Uruguayan economy forecasted to grow 9%

The Uruguayan economy is poised to expand 9% in 2004 given the boom in exports and private investment announced Uruguayan Economy Minister Isaac Alfie during the annual assembly of the Interamerican Development Bank, IDB, in Lima.

Mr. Alfie also announced that Uruguay was working in the long term to reduce its dependency from Argentina and Brazil and ensure more regional stability.

"We're working on the basis of a minimum 5% growth this year, but private analysts are saying that 8 to 9% is feasible. The thrust of the economy is coming from exports, industry, a very strong agriculture and private investment as confidence returns to the market", said Mr. Alfie.

The signals of "stability and growth" which are evident in the country, have improved the risk rating of Uruguay. This week Fitch Ratings increased the long term US dollar nominated bonds from a risk rating of "B-" to "B" and similarly for long term bonds in local currency, from "B" to "B+".

After suffering the full impact from the melting of the Argentine economy in 2001/2002, Uruguay managed in May 2003 a successful voluntary restructuring of its foreign debt with creditors.

"The better ratings are symbolic, we're back in track to recover investment grade", indicated Mr. Alfie who denied Uruguay was planning to float new bonds. In 2002 the Uruguayan economy after suffering a run on the banks contracted 10,8%, the worst ever in decades, but in 2003, particularly beginning in the second half managed to grow 2,5%.

Mr. Alfie anticipated that in the second half of 2004 private investment will keep growing and domestic demand will begin expanding in the last quarter. "We're expecting strong investments in airport and port infrastructure, and towards the end of the year we are planning to tender the building of a new electricity generating plant".

Regarding the Uruguayan currency, peso, Mr. Alfie forecasted it will remain stable during 2004, in spite of the electoral year, and in the second half the Central Bank will cease purchasing US dollars in the local money market.