MercoPress. South Atlantic News Agency

Uruguayan economy expanded 10.9% in the first quarter

Economy Minister D. Astori

Boosted by strong exports of agricultural commodities and domestic demand for communications services the Uruguayan economy expanded 10.9% in the first quarter of this year, compared to the same period a year ago.

This is the largest GDP January-March advance since the first quarter of 2004 when the economy expanded 12.5%. However both at government and private level the announcement was taken with certain caution since the first quarter coincides with the coming into full production of the Botnia pulp mill, the largest private investment in the country in the last half century. However the economic team headed by Minister Danilo Astori is expected to increase this year's growth forecast which was originally 5.25%. Given the excellent performance of the first quarter, annual growth now has a floor of 6.6%. Private consultants admitted it was "no surprise" because of the incidence of international food prices and the Botnia pulp mill. They also pointed out that Botnia is a one time effect and so are the exceptional investments in communications and transport during the first quarter of 2008. Compared to the last quarter of 2007, the expansion was 2.4% confirming the Uruguayan economy has been steadily growing for twenty one quarters, (since Oct.-Dec. 2002) with an overall GDP expansion of 60%. This also means that in the last four quarters to March 2008 the Uruguayan economy grew 8.5%. Transport and Communications expanded 26.9% over a year ago given the exceptional growth of the mobile telephones industry and in transport closely associated to the greater movement of farm and manufacturing goods. The manufacturing sector advanced 13.4% in the first quarter over the same 2007 period and 6.1% over the last quarter of 2007. Meantime Agriculture expanded 6.6% over a year ago but contracted 1.4% over the previous Oct. - Dec. quarter. Trade, restaurants and hotels also had an excellent performance over a year ago 11.4%, helped by a good tourism season, as well as the Others item. However construction lost its original dynamism and showed a 2.9% decline over a year ago. Regarding gross investment in fixed capital (machinery and equipment) the expansion was 16.6% over the first quarter of 2007. But is was mainly backed by the government sector spending 65% while the private sector showed a modes 9.5%. Overall in 2007 investment increased 6%.