The Uruguayan economy grew by 4.4% and is moving towards pre-pandemic levels

The Central Bank of Uruguay published the Gross Domestic Product (GDP) data closed in the fourth quarter of 2021. As foreseen by the Ministry of Economy and Finance, the Uruguayan economy grew by 4.4% compared to 2020.

“Economic activity in 2021 increased by 4.4% compared to 2020, a result that reflected a recovery in the economic situation associated with the covid-19 health emergency, which significantly affected the mobility of people during 2020 and the normal functioning of productive establishments,” reported the Central Bank in the National Accounts report.

According to the institution, from the point of view of production there was a “generalized growth in all activities, with the sectors commerce, accommodation and food and beverage supply and manufacturing notable for their impact.”

In fact, the “Trade, Accommodation and Food and Beverage Supply” sector grew by 7%, the “Manufacturing Industry” by 6.7%, “Construction” by 6%, “Professional Activities and Leasing” by 5.2%, the “Agricultural, Fishing and Mining” sector by 5% and “Financial Services” also by 5%.

Emphasis was also placed on the positive performance of education, real estate activities and other services. In the case of education, the “progress towards full face-to-face and the return to compulsory status” was highlighted.

“Reduced mobility restrictions and the reopening of borders” were highlighted as relevant variables.

With regard to demand, it was clarified that there was growth in both domestic and external demand. The first is linked to increased consumption by households and government. The second, on the other hand, has to do with the recovery of the foreign market, generating an increase of 14.4% in exports and 20.9% in imports in 2021, compared to the previous year.

In the fourth quarter of 2021, GDP registered an increase of 5.9% year-on-year, “reflecting, as in the previous quarter, a recovery in economic activity compared to the fourth quarter of 2020, a period in which there had been a contraction in year-on-year terms.”

In February 2022, the Lacalle Pou government revised its growth forecast for both 2021 and 2022 and estimated that economic activity had grown by 4.5% last year. His previous estimate had been 3.5 per cent.

According to analyst groups, these numbers in the economy confirm the post-pandemic recovery in 2020, being -6.1%, according to the updated data. It is located at the end of the year 2.9%, above the pre-pandemic level. However, it remains below Lacalle Pou's pre-government level, compared to the 2017-2019 period.

GDP data also mark a 3.4% floor for 2022 due to the “drag effect”.

“The recovery was widespread among the different sectors of activity”, along with “a strong dynamism in investment and exports, accompanied by the growth of household and government consumption,” said the director of the Macroeconomic Advisory, Nicole Perelmuter, in statements released by the Ministry of Economy. At the same time, he commented that the growth “was in line” with the projection given by the Minister of Economy, Azucena Arbeleche, on February 15.

The chief also noted the “important dynamism of activity during the last quarter of the year” and highlighted the effective overcoming of the “pre-pandemic level”. He stated that “GDP growth in the fourth quarter of 2021 confirms the process of recovery in economic activity”, and that “the indicators advanced indicate that this process would have continued in the first quarter of 2022″.

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