Spanish bank BBVA anticipates a strong recovery of the Uruguayan economy next year with one of the highest growth rates in the region and discards “any turbulences or surprises with the new government, it’s going to be continuation of current policies”.
The bank’s Service of Studies estimates Latinamerica will expand 3.5% next year and Uruguay with 4.5% will be in the leading group, Brazil, 4.7%; Peru, 4.3% and Chile, 4.1%.
“We expect a strong recovery in Uruguay for 2010, with 4.5% growth and inflation in similar levels to those of 2009 with 6.2%”, said economist Joaquin Vial, head of BBVA Service of Studies. “We see no disruptive signals” with the incoming administration of president elect Jose Mujica.
He added that there should be no significant changes in fiscal or external accounts next year and therefore “we don’t see any risk of misbalances accumulation that could threaten a sustained recovery of the Uruguayan economy in the coming years”.
Vial also estimated that the budget deficit will be a manageable 2.3% of GDP next year and the US dollar will be in the range of 21 pesos. Currently the US dollar quotes at 19 pesos after having reached 24 pesos at the height of the international crisis.
Anyhow “if the prevailing idea is that the appreciation of the local currency against the US dollar has gone too high it is the moment to begin dismounting fiscal stimuli”. However Vial is of the opinion that “the Uruguayan peso has not appreciated that much”
As to the region Vial argues it is a good moment for countries to increase their international reserves (purchasing US dollars in the local markets) “it’s still cheap and in anticipation of liquidity problems in future markets”.
“Anyhow we believe the worst of the global crisis is over for the region and several countries have come out of the turbulence even stronger”.
As to the recent presidential elections in Bolivia, Chile and Uruguay, Vial said there should be no surprises. “They are continuation processes, we do not anticipate surprises or disruptive signals”, He underlined nothing similar to what happened when Lula da Silva took office for the first time in 2002: “then it was a bag of uncertainties”.
BBVA and Santander are two of leading Spanish banks with strong interests in Latinamerica,