Uruguay will not achieve growth Gross domestic product (GDP) 1% this year, although this is the forecast presented by the government in accountability according to the analysis of the economic team Center for Studies of Economic and Social Reality (Ceres) based on the latest economic contraction data released by the Central Bank of Uruguay (BCU).
“It surprised them Extent of the fal lnot that he fell PBI in the second quarter because it was expected due to the drought,” said the director of Ceres, Ignatius Munyo, in the informal breakfast program. The economist pointed to a decline of 2.5% compared to the previous year PBI in the second quarter of 2023, mainly due to the dryness and be Negative impact on the agricultural sector, fundamental to the country’s economic balance. “The impact should be a little less,” he emphasized.
For this reason, analysts’ forecasts have been revised downwards again and move away from the 1% growth scenario for the year PBI For this year, the national government has suggested in the accountability exercise that it was not too optimistic about this either. “In our view and based on the analysis of the Ceres team of economists, It is difficult for us to achieve growth of this magnitude.“Munyo claimed.
“We see an economy with weak growth, practically zero, on average for the whole of 2023,” the economist said, adding that this would “extend the growth of 2023 would be closer to 0 than 1“.
On the other hand, no “economic recoveries” are expected that could reverse this situation in a context characterized by various problems at the level of public finances: on the one hand, there is an improvement in the purchasing power of Uruguayans due to the decrease in inflation spent on it Argentina because of the great Exchange rate difference with the neighboring country; while again due to the decline PBI Collection falls but the government Public spending is increasing.
In this context, Munyo said that “the Financial situation of Uruguay It is a worrying situation.” “Let us be clear that in the last moving year, in the last twelve months, expenditure has increased sharply, in addition to the decrease in revenue, and the deficit is already at 4% PBI, Orders of magnitude that we have been commenting on with concern for years,” said the director of Ceres.
As an example, he explained that in the last twelve months Public spending rose 3% above inflation. “It is the average growth in public spending in the previous government. “The last Vázquez administration recorded growth in its five years at the same rate as spending increased in the last year of government here,” the economist said.
A sharper decline than expected
He PBI fell 2.5% in the second quarter compared to the same period in 2022, a decline attributed to the impact of the dryness and its negative impact on the agricultural sector, according to the Quarterly National Accounts (CNT) published by the Central Bank of Uruguay (BCU).
If we also analyze economic activity on a seasonally adjusted basis, the decline was 1.4% compared to the first quarter of the year, when the GDP increased by 0.9%, with progress recorded in almost all sectors.
In terms of productivity, the declines in this sector compared to the previous year were noticeable agriculture, fishing and mining, with 27%, followed by electricity, gas and water, which reached 12%, all connected to the dryness and that Water crisis.
However, areas such as transport and storage, information and communication developed positively with an increase of 2.5%; Professional activities and leasing with an improvement of 3.5%; and public administration activities with an increase of 3.6%.