MercoPress. South Atlantic News Agency

Uruguay forecasted to expand 5.5% this year and 4.5% in 2012

The economy is expected to create 40.000 new jobs

The Uruguayan economy is forecasted to expand 5.5% this year generating 40.000 new jobs, and 4.5% in 2012, according to “Prospects and Tendencies” announced Thursday by the Economy Institute from the Economics Faculty.

In a context of international uncertainty and with Brazil growing at a slower rate than Argentina, it is anticipated that the Uruguayan expansion this year will “be fuelled both by domestic and external demands” with GDP reaching 48.5 billion dollars.

The fiscal deficit, compared to the previous year is anticipated to “worsen” reaching 1.5% of GDP.

Regarding the labour market, employment is expected to grow on average 1.3 percentage points, which is equivalent to approximately 40.400 new jobs.

For 2012 prospects are for the Uruguayan economy to expand 4.5% because of greater export volumes and the domestic market demand, supported with improvements in the jobs’ market.

However the level of employment is expected to remain stable and the stronger tendency will be fuelled by higher real salaries.

As to government spending, the Economy Institute paper estimates that the 2012 fiscal deficit will be equivalent to 1% of GDP, with inflation below 2011 but still above the Central bank target of 6.5%

The report points out that if the impact of the global crisis on developing economies is “greater than expected”, evidently the evolution of the Uruguayan economy will be less favourable with a review of the current expansive cycle.

This “would undoubtedly complicate the attainment of the macro-economic targets currently established”, concludes the report.