The Uruguayan economy continued its recovery path in the third quarter of the year, according to the National Accounts report released this Wednesday by the Central Bank of Uruguay (BCU). The Gross Domestic Product (GDP) grew 2.7% compared to the immediately preceding quarter (April-June), that is, in seasonally adjusted terms.
Meanwhile, in lAt year-on-year measurement, economic activity expanded 5.9% compared to the July-September period of last year. The data “reflects a recovery in economic activity in relation to the third quarter of 2020, a period in which a contraction had been observed in year-on-year terms as a consequence of the pandemic,” said the BCU.
In the third quarter of the year, a generalized recovery in activity was observed and the performance of the commerce and accommodation sectors stood out (15.1%). For its part, consumer spending grew 4.5% and exports of goods and services 28.5%.
The economist, Aldo Lema, explained on his Twitter account that in the third quarter Uruguay’s (seasonally adjusted) GDP “completely reversed the fall associated with the pandemic and returned to its level in the fourth quarter of 2019 (pre-pandemic).”
The most relevant: in the third quarter, Uruguay’s GDP (seasonally adjusted) completely reversed the fall associated with the pandemic and returned to its level in the fourth quarter of 2019 (pre-pandemic). https://t.co/82BEkMLHAy
– Aldo Lema – Uruguay (@AldoLema_uy) December 22, 2021
“The year-on-year performance by activities in the third quarter reflects a generalized increase in the added value of the sectors in relation to the third quarter of 2020, where the effects of the health crisis were significant for the performance of economic activity,” highlighted the BCU in your statement.
BCU
Agribusiness added value expanded 5% year-on-year in the third quarter, as a result of a strong positive impact on beef cattle raising due to the increase in slaughter and the export of live cattle, according to the BCU. Meanwhile, the industry expanded 5.2% in the year-on-year comparison also due to the greater activity of the refrigeration industry – supported by an increase in external demand – and to a lesser extent the automotive industry, oil refining and manufacture of pharmaceutical products.
Likewise, there was a 1.9% year-on-year increase in power generation in the third quarter, basically explained by UTE exports to Brazil. Construction, for its part, expanded 3.1% and was leveraged both by the growth of buildings and other constructions. During the July-September period, the positive impact of the assembly of the UPM mill and also of the construction of the Central Railroad stood out.
Consumption and foreign trade
Final consumption spending grew 4.5% in the third quarter. Household spending expanded 2%, while that of the government did so with strong dynamism (+ 14.6%). In the first case, there was an increase in the consumption of services affected by sanitary restrictions in the same quarter of last year, as well as of motor vehicles and clothing and footwear. In the case of the government, the largest expenditure was for the growth in education and public health services.
For its part, gross capital formation (investment) expanded 7.1% year-on-year, also with a strong impact from the works associated with the construction of the UPM mill in Paso de los Toros and the Central Railroad.
Meanwhile, exports of goods and services increased 28% in year-on-year terms and had a positive impact of 7.1 points in the third quarter, while imports increased 27.6%.
At the beginning of the month, the Minister of Economy and Finance, Azucena Arbeleche, declared at a press conference that “the economy is very close to resuming the normalization of activity” and announced that the economic team expects that in the quarter (October- December) “the product as a whole reaches pre-pandemic levels.” The final data for the year will be known only in March.
On that occasion, the hierarch also confirmed the growth forecasts of 3.5% of GDP and affirmed that private analysts – who saw the figure as very optimistic – corrected their forecasts upwards.
Analysts and public and private institutions that participated in the BCU’s Expectations Survey in November estimated that GDP would grow 3.1% this year. The projection, which in July was 2.6%, had four consecutive improvements since then.
