The latest Situation Monitor of the Catholic University of Uruguay (UCU) estimated a growth of 5% for GDP in 2022. The report of the economist Xavier deHaedo, indicated that, “the reestimates of the previous quarters, plus the data of the fourth quarter of last year, left a ‘statistical drag’ of 3.6% for this yearwhich now allows us to expect GDP growth close to 5% in 2022″.
The monitor argued that the Ministry of Economy and Finance (MEF) made its estimate of 3.8% for this year before knowing the latest GDP data. Although the figure for 2021 was in line with the 4.5% expected by the MEF, the data for the final quarter (October-December) and the re-estimation of previous quarters considerably raised the “carryover effect” of growth for this year from 2.5% to 3.6%.
What is “drag”?
The economist and partner of Vixion Aldo Lema defined the “statistical drag” of 3.6% as “growth if GDP were to remain stagnant all this year at its level in the fourth quarter (of 2021).” In other words, since in the previous quarters of last year the GDP was lower, sustaining the level of the last quarter for all of 2022 would total a product 3.6% higher than that of 2021.
With this drag of 2.5%, the MEF projected a growth of 3.8% this year, “what was implicit was one of the order of 2% ‘throughout’ 2022from end to end”. De Haedo considers that with growth of 2% throughout the year, but with a drag 1.1% greater than that forecast by the MEF, “The same behavior expected throughout this year would now lead to growth close to 5%instead of 3.8%.
“Is a growth of the order of 2% possible between the fourth quarters of 2021 and 2022? Even in the context of uncertainty in the global perspectives, it can be affirmed that it is, especially since this year it is ‘incorporated’ into the economic activity with more vigor than in previous years the tourism sector and when the infrastructure works in plant two of UPM and in the Central Railway will continue with intensity“, deepened the document of the UCU.
On the other hand, the reestimates of the GDP in the previous quarters reduced the contraction suffered by the economy during 2020 from -5.9% to -6.1%.
This Tuesday also met the GDP growth expectations of private analysts consulted by the BCU, which estimated—like the MEF in February—an expansion of the Uruguayan economy of 3.8%. This figure implied a rise of more than half a point compared to the previous month, of 3.27%.
However, GDP growth expectations “possibly they will be corrected upwards in April” again “since not all the answers (of the measurement published today) incorporate the latest data (of the final quarter of 2021)“, indicated the CPA-Ferrere economist Nicolás Cichevski on his Twitter account.
