The analysts and public and private institutions that participated in the survey of expectations of the Central Bank (BCU), They again revised downward their growth forecasts for the Uruguayan economy in 2023.
In the median response to the query carried out in March, the expected growth is now 1.8%, from 2.45% in February. It is the fourth consecutive downward adjustment since November, when projected growth was 3%.
These new projections come after knowing the final data of the Gross Domestic Product (GDP) for 2022. Last year the Uruguayan economy grew 4.9% on average, but it entered a technical recession during the second semester.
The first half of the year had a boost in the prices of raw materials, which favored the agro-industrial sector and its exports; in the second half they gave way, to which must be added the restrictions imposed by China due to the pandemic, affecting demand -especially for meat- and the consequences of a severe drought, which will still have its mark in 2023.
The latest projections presented by the Executive Branch suggest that activity will grow again this year, but at a rate of 2%. The figure is one percentage point below that stipulated in the last Accountability. This number is subject to the uncertainty generated by the impact of the drought on the agricultural sector.
Inflation
For the end of the year, the median of responses projects inflation of 7.2%, similar to what was forecast last month. Meanwhile, expected inflation for the 24-month horizon –relevant for monetary policy– remains at 6.7%, this is above the ceiling of the target range (6%).
the value of the dollar
The analysts who responded to the BCU query expect, on average, a exchange rate at $40.33 at the end of August, and at $41.5 at the end of the year, a value of just over $2.5 from current value ($38,835).
The depreciation of the US currency is worrying exporters and the sector is calling for changes in monetary policy. Some economists point out that there are aspects that could reverse this downward trend.
The CPA economist Ferrere Alfonso Capurro pointed out days ago that it is expected that the Monetary Policy Committee (Copom), from the meeting that it will have on Wednesday, April 19, will lower the interest rate. “That’s going to somewhat decompress the exchange market,” he said.
The other aspect that would favor a rebound in the dollar It comes from the foreign sales side. Uruguay reached a record of exports in 2022 with US$ 13,356 million. But for this year the perspective is different. A fact that will affect sales is the drought
“The supply of dollars from the commercial point of view (exports) is going to be less than in 2022. And if this was a factor of downward pressure on the dollar, it will no longer be in 2023,” the PwC economist had pointed out. Ramón Pampín in dialogue with The Observer.
