The Central Bank of Uruguay (BCU) disclosed that Uruguay experienced a modest expansion, registering a growth rate of 0.4 percent over the course of the year 2023.
This modest growth comes despite the significant challenge of a severe drought.
The BCU’s Report links growth to 2023’s tourism, a new pulp mill, and better 2023/2024 agricultural yields compared to the drought-impacted previous year.
Yet, challenges arose. The drought affected electricity, the completion of the pulp mill affected construction, and a September refinery shutdown hindered performance.
On the positive side, the agriculture, fishing, and mining sectors reported a 5 percent growth, and sectors like health, education, and real estate also saw gains (1.1 percent).
In contrast, the electric power, gas, and water sector dropped by 9.2 percent, and construction fell by 5.6 percent.
The growth stems from increased domestic demand, slightly tempered by reduced net external demand.
Consumer spending went up by 2.8 percent, while investment decreased by 2.7 percent. Trade dynamics showed a 0.7 percent increase in exports and a 6 percent rise in imports.
After revising its 2023 growth forecast to around 0.5 percent, President Luis Lacalle Pou’s administration is hopeful for a rebound in 2024, post-drought recovery.
This situation underlines the resilience of Uruguay’s economy in the face of environmental and sector-specific challenges, pointing to a cautious optimism for the coming year.
Background
This growth trajectory is set against a backdrop of historical economic stability in Uruguay, characterized by prudent fiscal management and strategic policy-making.
As the country moves forward, the lessons from 2023’s economic performance will undoubtedly inform future strategies to foster growth, enhance resilience, and secure prosperity for its citizens.