MercoPress. South Atlantic News Agency

Uruguay beats global expectations and is set to grow 1.3% this year

The International Monetary Fund World Economic Outlook estimates that the Uruguayan economy will expand 1.3% this year and 2% in 2010, following an almost record breaking 8.9% in the fourth quarter of 2008.

The forecast is below the recently announced by the Uruguayan government, 2% and less than the 1.5% of private consultants and economists polled on a regular basis by the Central Bank.

Anyhow this compares favourably with the IMF April report which anticipates the global economy will contract 1.3% in 2009, the first such phenomena in the last six decades.

Regarding Uruguayan inflation the IMF estimate is 7% this year and 6.7% in 2010, after having ended 2008 with 7.9%

Last January the IMF had predicted world output would increase by 0.5% in 2009 but it now projects that the US will contract 2.8% this year and zero growth next year. The UK will see its economy shrink by 4.1% in 2009 and by a further 0.4% in 2010.

But other major economies are predicted to shrink even more, with Germany declining by 5.6%, Japan by 6.2%, Russia 6% and Italy by 4.4% in 2009.

US neighbours Mexico and Canada will fall 3.7% and 2.5% this year.

However China is forecasted to expand 6.5% and India 4.5%.

The prospects for the advanced economies are not much brighter in 2010, with an overall forecast of zero growth.

The IMF says this represents “by far the deepest post-World War II recession” with an actual decline in output in countries making up 75% of the world economy.

Currently, output is falling by an “unprecedented” 7.5% annual rate in the rich countries in the last quarter of 2008, and the IMF expects the same rate of decline in the first quarter of this year.

Only a recovery in developing and emerging market countries will propel the world economy back into positive growth in 2010, albeit at a relatively weak level of 1.9%.

The prospects for world trade are even gloomier, with the IMF now forecasting world trade volumes to decline by 11% in 2009, and barely grow at all in 2010.

After 60 years as the engine of world growth, the sharp fall in trade is now hitting many of the leading exporting nations, particularly in Asia.