MercoPress. South Atlantic News Agency

Uruguay's GDP expectations lowered amid pandemic

With all borders closed, tourism was the most affected of the economic activities. (Photo: Sebastián Astorga)

Uruguay's Center for Economic Research (CINVE) Thursday submitted its latest report, which showed a projected Gross Domestic Product lowered from previous expectations, given the economic consequences of measures taken to curb the spread of the coronavirus pandemic.

“In the first quarter the reactivation would have slowed down and the growth prospects for 2021 worsen,” according to the document, which ultimately foresaw the new GDP growth for this year at 1.9%, half a percentage point below the previous projection.

Uruguay's economy recorded during the last months of 2020 a slowdown from the recovery which began in the third quarter when an expansion of the Gross Domestic Product was observed in seasonally adjusted terms at 8.9%.

The health situation has had an impact on various sectors of the economy, the report said, both on the supply side and on the demand side.

With all borders closed, tourism was the most affected of the economic activities, while mandated quarantines and precautionary self-isolation of workers have had an impact on the production pace.

Meanwhile, the fall in real household income is leading to a contraction in consumption, which is aggravated by the decrease in mobility (concerning normal times) and constraints in spending after that shortage of resources, due both to loss of jobs and declines in real wages.

Analysts also predict minimal growth for the second quarter of the year under the present sanitary and economic conditions, but exports are expected to gradually bounce back as the vaccination campaign progresses.

But CINVE still maintains, for now, the growth predictions of 2.2% for the year 2022, however subject to the evolution of the coronavirus crisis.