Uruguay Economic Outlook 2022

Summary

In 2022 the activity in Uruguay will grow 4.7%, with an important statistical contribution that leaves the 4T21 and the contribution of investment, external demand and consumption to a lesser extent. The conflict in Europe has a moderate net positive impact through the rise in commodity prices for now.

Key points

• Key points:
• The global economy will slow more than expected. After expanding 6.1% in 2021, global GDP is projected to grow 3.9% this year and 3.6% in the following year. Inflationary pressures are mainly accelerated by commodity prices and supply bottlenecks.
• The fiscal result will show an improvement due to expenditure restraint and a lower allocation of COVID items, while revenues will increase due to greater activity. This year the fiscal deficit will stand at 3.2% of GDP (-4.1% in 2021).
• The current account will reach a deficit of 1.6% of GDP. The increase in the price of agricultural commodities exported by Uruguay will be partially offset by the increase in the price of oil.
• Inflation, which added up the impact of international commodity and logistics prices, will reach 8.3% in 2022 and 7.0% in 2023. The CB will maintain its commitment against inflation and raise the monetary policy rate to at least 10.5%.
• Sustained by sound macroeconomic fundamentals, the peso adds the effect of high commodity prices and monetary policy. By December 2022, the exchange rate will reach UYU/USD 42.1. By adjusting for inflation, the real exchange rate remains above the pre-pandemic level.

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