| Date - Field | Uruguay - Economy - overview |
2008 January
Economy - overview | Uruguay's well-to-do economy is characterized by an export-oriented agricultural sector, a well-educated work force, and high levels of social spending. After averaging growth of 5% annually during 1996-98, in 1999-2002 the economy suffered a major downturn, stemming largely from the spillover effects of the economic problems of its large neighbors, Argentina and Brazil. For instance, in 2001-02 Argentina made massive withdrawals of dollars deposited in Uruguayan banks, which led to a plunge in the Uruguayan peso and a massive rise in unemployment. Total GDP in these four years dropped by nearly 20%, with 2002 the worst year due to the banking crisis. The unemployment rate rose to nearly 20% in 2002, inflation surged, and the burden of external debt doubled. Cooperation with the IMF helped stem the damage. Uruguay in 2007 improved its debt profile by paying off $1.1 billion in IMF debt, and continues to follow the orthodox economic plan set by the Fund in 2005. The construction of a pulp mill in Fray Bentos, which represents the largest foreign direct investment in Uruguay's history at $1.2 billion, came online in November 2007 and is expected to add 1.6% to GDP and boost already booming exports. The economy has grown strongly since 2004 as a result of high commodity prices for Uruguayan exports, a competitive peso, growth in the region, and low international interest rates. |
2007 January
Economy - overview | Uruguay's well-to-do economy is characterized by an export-oriented agricultural sector, a well-educated work force, and high levels of social spending. After averaging growth of 5% annually during 1996-98, in 1999-2002 the economy suffered a major downturn, stemming largely from the spillover effects of the economic problems of its large neighbors, Argentina and Brazil. For instance, in 2001-02 Argentina made massive withdrawals of dollars deposited in Uruguayan banks, which led to a plunge in the Uruguayan peso and a massive rise in unemployment. Total GDP in these four years dropped by nearly 20%, with 2002 the worst year due to the banking crisis. The unemployment rate rose to nearly 20% in 2002, inflation surged, and the burden of external debt doubled. Cooperation with the IMF helped stem the damage. A debt swap with private-sector creditors in 2003 extended the maturity dates on nearly half of Uruguay's then $11.3 billion of public debt and helped restore public confidence. The economy grew about 12% in 2004 as a result of high commodity prices for Uruguayan exports, a competitive peso, growth in the region, and low international interest rates, and it continued to grow nearly 7% annually in 2005 and 2006. |
2006 January
Economy - overview | Uruguay's well-to-do economy is characterized by an export-oriented agricultural sector, a well-educated workforce, and high levels of social spending. After averaging growth of 5% annually during 1996-98, in 1999-2002 the economy suffered a major downturn, stemming largely from the spillover effects of the economic problems of its large neighbors, Argentina and Brazil. For instance, in 2001-02 massive withdrawals by Argentina of dollars deposited in Uruguayan banks led to a plunge in the Uruguyan peso and a massive rise in unemployment. Total GDP in these four years dropped by nearly 20%, with 2002 the worst year due to the serious banking crisis. Unemployment rose to nearly 20% in 2002, inflation surged, and the burden of external debt doubled. Cooperation with the IMF limited the damage. The debt swap with private creditors carried out in 2003, which extended the maturity dates on nearly half of Uruguay's $11.3 billion in public debt, substantially alleviated the country's amortization burden in the coming years and restored public confidence. The economy grew about 10% in 2004 as a result of high commodity prices for Uruguayan exports, the weakness of the dollar against the euro, growth in the region, low international interest rates, and greater export competitiveness. |
2005 January
Economy - overview | Uruguay's well-to-do economy is characterized by an export-oriented agricultural sector, a well-educated workforce, and high levels of social spending. After averaging growth of 5% annually during 1996-98, in 1999-2002 the economy suffered a major downturn, stemming largely from the spillover effects of the economic problems of its large neighbors, Argentina and Brazil. For instance, in 2001-02 massive withdrawals by Argentina of dollars deposited in Uruguayan banks led to a plunge in the Uruguyan peso and a massive rise in unemployment. Total GDP in these four years dropped by nearly 20%, with 2002 the worst year due to the serious banking crisis. Unemployment rose to nearly 20% in 2002, inflation surged, and the burden of external debt doubled. Cooperation with the IMF limited the damage. The debt swap with private creditors carried out in 2003, which extended the maturity dates on nearly half of Uruguay's $11.3 billion in public debt, substantially alleviated the country's amortization burden in the coming years and restored public confidence. The economy grew about 10% in 2004 as a result of high commodity prices for Uruguayan exports, the weakness of the dollar against the euro, growth in the region, low international interest rates, and greater export competitiveness. |
2004 January
Economy - overview | Uruguay's well-to-do economy is characterized by an export-oriented agricultural sector, a well-educated workforce, and high levels of social spending. After averaging growth of 5% annually during 1996-98, in 1999-2002 the economy suffered a major downturn, stemming largely from the spillover effects of the economic problems of its large neighbors, Argentina and Brazil. For instance, in 2001-02 massive withdrawals by Argentina of dollars deposited in Uruguayan banks led to a plunge in the Uruguyan peso and a massive rise in unemployment. Total GDP in these four years dropped by nearly 20%, with 2002 the worst year due to the serious banking crisis. Unemployment rose to nearly 20% in 2002, inflation surged, and the burden of external debt doubled. Cooperation with the IMF and the US has limited the damage. The debt swap with private creditors carried out in 2003, which extended the maturity dates on nearly half of Uruguay's $11.3 billion in public debt, substantially alleviated the country's amortization burden in the coming years and restored public confidence. The economy is expected to resume growth in 2004 (perhaps 4% or more) as a result of high commodity prices for Uruguayan exports, the weakness of the dollar against the euro, growth in the region, low international interest rates, and greater export competitiveness. On the negative side, in December 2003 the electorate voted to repeal the law permitting a cautious liberalization of the energy industry. |
2003 January
Economy - overview | Uruguay's economy is characterized by an export-oriented agricultural sector, a well-educated workforce, and high levels of social spending. After averaging growth of 5% annually during 1996-98, in 1999-2002 the economy suffered a major downturn, stemming largely from lower demand in Argentina and Brazil, which together account for nearly half of Uruguay's exports. Total GDP in these four years dropped by nearly 20%, with 2002 the worst year. Unemployment rose to nearly 20% in 2002, inflation surged, and the burden of external debt doubled. Cooperation with the IMF and the US has limited the damage, which is still extensive. Moves to reschedule debt and promote economic recovery may help limit a further decline in output in 2003. |
2002 January
Economy - overview | Uruguay's economy is characterized by an export-oriented agricultural sector, a well-educated workforce, and high levels of social spending. After averaging growth of 5% annually in 1996-98, in 1999-2001 the economy suffered from lower demand in Argentina and Brazil, which together account for nearly half of Uruguay's exports. Despite the severity of the trade shocks, Uruguay's financial indicators remained more stable than those of its neighbors, a reflection of its solid reputation among investors and its investment-grade sovereign bond rating - one of only two in South America. Challenges for the government of President Jorge BATLLE include reducing the budget deficit, expanding Uruguay's trade ties beyond its Mercosur trade partners, and reducing the costs of public services. GDP fell by 1.3% in 2000 and by 1.5% in 2001. |
2001 January
Economy - overview | Uruguay's economy is characterized by an export-oriented agricultural sector, a well-educated workforce, relatively even income distribution, and high levels of social spending. After averaging growth of 5% annually in 1996-98, in 1999-2000 the economy suffered from lower demand in Argentina and Brazil, which together account for about half of Uruguay's exports. Despite the severity of the trade shocks, Uruguay's financial indicators remained more stable than those of its neighbors, a reflection of its solid reputation among investors and its investment-grade sovereign bond rating - one of only two in Latin America. Challenges for the government of President Jorge BATLLE include expanding Uruguay's trade ties beyond its MERCOSUR trade partners and reducing the costs of public services. GDP fell by 1.1% in 2000 and will grow by perhaps 1.5% in 2001. |
2000 January
Economy - overview | Uruguay's economy is characterized by an export-oriented agricultural sector, a well-educated workforce, relatively even income distribution, and high levels of social spending. After averaging growth of 5% annually in 1996-98, in 1999 the economy suffered from lower demand in Argentina and Brazil, which together account for about half of Uruguay's exports. Despite the severity of the trade shocks and ensuing recession, Uruguay's financial indicators remained more stable than those of its neighbors, a reflection of its solid reputation among investors and its investment-grade sovereign bond rating - one of only two in Latin America. Challenges for the government of incoming President Jorge BATLLE include expanding Uruguay's trade ties beyond its Mercosur trade partners and bolstering Uruguay's competitiveness by increasing labor market flexibility and reducing the costs of public services. Growth should recover in 2000, to perhaps 3%. |
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This page was last updated on 1 October, 2008 |
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