Macro Forum: The Street View



GDP grew by 2.1% year-on-year in third quarter over the same period last year with growth experienced in most sectors apart from construction and retailers. The agriculture sector experienced growth of 6.4% year-on-year. Manufacturing grew by 4.6% mainly driven by the renewed operation of Ancap’s oil refinery that had been switched off for maintenance since the third quarter 2017.

Inflation rose to 8% in December, up from 6.5% the previous year and above the central bank’s target band of 3-7%. A depreciating peso that has weakened against the dollar by 12.9% in 2018 continues to raise import prices.

With rising inflation and a depreciating currency there is likely to be pressure on the central bank in its next meeting in April to raise the benchmark interest rate from its current level of 9.25%.

The current account deficit in 2018 is at 1.7% of GDP following a 0.7% surplus in 2017. Exports have declined by 10.5% year-on-year in third quarter, due to nearest trading partner Argentina’s currency crisis and imports have reduced owing to economic pressures faced by Uruguay’s two most important trading partners, Brazil and China. A recent deal with Japan to receive their beef exports should see a rebound in exports in early 2019.

The governments biggest challenge is to manage an increasing fiscal deficit that has risen to 3.4% of GDP in 2018 due to continuing government spending and poor tax receipts. The labour market is also weak with unemployment rates between 8% and 9%.







Real GDP Growth

Source: International Monetary Fund

Uruguay FX vs FV

Source: Bloomberg Spot Prices and Actis methodology for Fundamental Value


Source: International Monetary Fund


Nicolas Escallon

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Tabare Vazquez
Broad Front
Last Election
Next Election
2019 Oct