The IMF Concluding Statement of 10 December 2015 states that ¨Uruguay has experienced more than a decade of high economic growth, and has become a bastion of stability in a volatile region. Uruguay’s economic performance is still poised to exceed the regional average.¨ The International Monetary Fund says that growth is projected to decelerate to 1.6 percent in 2015 due to a cooling off in domestic spending from recent highs and weak external conditions. Last year the Uruguayan economy expanded 4% and the government’s target for this year was 3%.
The Economist Intelligence Unit confirms that GDP growth will slow to below 3% in 2015, but the medium-term outlook remains good, bolstered by large-scale investment projects.
Rabobank states that after years of very high growth, Uruguay’s economy is ‘cooling off’ as exports and domestic demand growth rates are both slowing. The relatively high level of growth of recent years was underpinned by high levels of foreign direct investment and a relatively high level of productivity growth. This bodes well for Uruguay’s medium-term growth prospects, even as growth is likely to slow down a bit in the near-term.
With an estimated per capita income of USD 16,188 in 2014, Uruguay is one of the richer countries of Latin America. Uruguay’s population and its economy are relatively small. The country has relatively good public institutions. Uruguay’s exports predominantly exist of agricultural products, in particular livestock/beef, agriculture and dairy products. Other important economic sectors are the financial sector and tourism sector.
A high level of (foreign direct) investment has diversified the economy and is expected to continue to do so in the near future. The high level of foreign direct investment is an important risk mitigant for the relatively high current account deficit.
Uruguay’s economy will continue growing faster than the region’s, but at a more moderate pace, the Uruguayan Central Bank said in its third-quarter Monetary Policy Report.