Two key leaders of the Executive Branch’s economic team, the Undersecretary of the Ministry of Economy and Finance (MEF), Alejandro Irastorza and the President of Central Bank of Uruguay (BCU), Diego Labat attended the closing ceremony of the XI. National Congress of Graduates in Economics organized by the Association of Accountants, Economists and Administrators of Uruguay. In their contributions, they defended the current government’s economic policy, arguing that it was able to respond to the needs that arose during the government’s tenure Pandemic and project a growth of the country despite external difficulties.
Irastorza began by looking back at the economic process from the beginning of the pandemic to the present, pointing out that the scenario is analyzed in two different ways: with “Low Lights” to respond to the needs and emergencies of the moment, and with ” Long Lights”. Lights” to work long term.
“As soon as we get the pandemic under control, it will Ministry of Economy and Finance sent to houses of Parliament what he called the Coronavirus Fund. There, more than $2,000 million has been allocated to meet needs. That came with the pandemic global slowdown and especially in the case of our main buyer who was China, which affected our economy. Then, unfortunately, the invasion of Russia A Ukrainewhich also led to an increase in food prices and, more recently, an increase in food prices water emergency derivation in the historical dryness that have affected this country, where we are providing essential resources and equipment to support the sectors most affected,” he said to contextualize his analysis.
Already when dealing with more recent figures, the State Secretary pointed out that the year 2022 was one of the important achievements that are reflected in the macroeconomic indicators economic activity grew 4.9% in real terms this year after growing 5.3% in 2021. This growth came with it repayment of employment and the increasing formality of the labor market, he said.
For 2023, Irastorza estimated growth of 1.3, a figure hampered by the severe drought in Uruguay. The boss also announced: “By 2024 we expect a revival of the economy.” growth path” predicts GDP growth of 3.7%, driven by the growth of the Exports of goods and services and that household consumption according to their estimates.
He elaborated on the numbers, noting that for the full five-year period 2020-2024, investments in infrastructure is expected to reach $11,476 million when combined with government investment in housing, up 7% from the previous five-year period.
Finally, Alejandro Irastorza mentioned that “the current macroeconomic situation is part of it.” a fiscal policy which since 2020 has been based on responsible and prudent use of public funds as a necessary prerequisite for the stability and the economic growth of Uruguay. This means that the government’s political priorities must be met while addressing the issues Public debt sustainability. “The fiscal rule is nothing more or less than taking care of Uruguayans’ money in the best possible way,” he explained.
The BCU and low inflation as a contributor
The President of the Central Bank, Diego Labat, gave a lecture on the topic inflation to match its exhibition as part of the traditional lunch of the Association of Marketing Managers (ADM) last week.
The hierarch indicated that the agency provides for this inflation will be 5.30% in two years and stressed that it is the government’s decision to maintain the exchange rate Free Floating Regime.
“If one has inflation high, there are always winners and losers, there are people or sometimes companies that have a fixed income and they are doing badly because of that inflation it undermines the purchasing power of some incomes. That creates a lot of noise throughout the economy that has to do with that income redistribution‘ he argued at the beginning of his message.
“Have a inflation 8% ultimately impacts the micro issues of every single business across the country. It is important, Uruguay Growth rates are historically low and if we want to reverse that and let the economy grow at a different pace, we need companies that take different risks, that can grow in different ways, and for that we need lower inflation. “This is the best contribution the central bank can make,” he affirmed.
In relation to dollar Labat again took note of criticism from the export industry mentioning this Exchange Rate Delay However, he defended the current regime of the “Floating Exchange” without this having to mean renunciation market intervention if deemed necessary.
“The Uruguayan peso has appreciated compared to… dollar. clearly that dollar It has weakened globally and it has weakened against the currencies of the region,” concluded the BCU President.