Highlights of Uruguay
2009 will be undoubtedly remembered as an unusual year for the economy. The serious international crisis, which worsened by the end of 2008, suggested a complex and uncertain scenario. The deterioration of all indicators in major economies around the world at the beginning of the year led to forecasts of a deep recession that would last at least throughout 2009. This was verified in developed and some emerging economies. However, emerging countries in Asia, principally China, showed significant resilience.
With the start of the third quarter, the situation began to improve rapidly in some cases as developed economies showed that the worst was over in terms of various economic indicators and China enjoyed a faster pace of growth. Meanwhile, the world’s financial system began to see improvements in stock indices and the beginning of a return of capital flows to emerging markets.
In Uruguay, the impact of the crisis was felt in the last quarter of 2008 and in the first of 2009. GDP fell in early 2009, but a recession was averted in the second quarter when economic activity remained stable. Most economic indicators began to recover in the second half of the year and GDP growth for 2009 is estimated to be 2%. As such, Uruguay would be one of the few Latin American countries without a decline in GDP.
The relatively slight impact was due to greater macroeconomic strengths in the Uruguayan economy, including: proper financial regulation; maintenance of credit; stronger public finances with significant reductions in the fiscal deficit over the past few years; a better debt maturity profile and more resources to service debt; a flexible exchange rate system to prevent the loss of price competitiveness vis-à-vis major markets; and exports based on raw materials and foodstuffs (global demand of these two items was not affected as drastically as others).
