MercoPress. South Atlantic News Agency

IMF estimates less growth (3.5%) and higher prices (7.4%) for Uruguay in 2012

The IMF has downed all growth estimates in South America because of the European dependence

Uruguay growth estimate has been downed for 2012 while prices will be higher, according to the latest IMF World Economic Outlook released on Tuesday. The economy is set to grow 3.5% down from 4.2% while prices will climb to 7.4% compared to the 6.5% estimate of the previous WEO last September.

If this proves to be correct Uruguay will be below the estimate growth for the South American region which has been forecasted at 3.8%. Further more together with Brazil (3%) and Paraguay (minus 1.5%), Uruguay will be among the countries with lowest growth this year while at the other end stand Peru and Bolivia with 5.5% and 5%.

However for 2013 the WEO expects the economy to recover and expand 4%, but again under the region’s average of 4.3%.

Regarding prices the IMF estimates that this year they will reach 7.4% (compared to an original forecast of 6.5%) reflecting greater pressures than those anticipated in the previous September WEO. For 2013 inflation is estimated at 6.6%.

Unemployment this year is expected to stabilize at 6% while the current account deficit is estimated to reach 3.6% of GDP.

The latest WEO points out that since South America and in particular the Southern Cone is highly dependent of commodities’ prices, it could suffer the consequences if the European crisis extends to a more generalized deceleration pattern, according to the IMF. However the “financial impact” of an intensification of the European crisis will “probably be limited”.

Regarding Argentina the WEO forecasts that GDP which expanded 8.9% in 2011 will drop to 4.2% and to 4% the following year. (Official) inflation which reached 9.8% last year is estimated to reach 9.9% this year and the following.

As to unemployment the WEO says that the rate of 7.2% in 2011 should descend to 6.7% this year and even better the following year with 6.3%.

Chile’s economy expanded 5.9% last year, but in 2012 growth will reach 4.3% and 4% in 2013 according to the WEO. Inflation which reached 3.3% last year is expected to climb to 3.8% this year and to 3% by 2013.
Unemployment in Chile was 7.1% in 2011 but should reach 6.6% this year and 6.9% in 2013.

As to Paraguay the economy which expanded 3.8% last year will close 2012 with a strong contraction of 1.5%, but the following year should retake robust growth of 8.5% of GDP. Inflation last year was 6.6% but this year and the following is estimated at 5% by the WEO.
Finally unemployment which was down to 5.6% last year will climb to 5.8% this year and should return to 5.5% in 2013, says IMF