2024-04-23 16:03:10
MONTEVIDEOUruguay‘s economy barely grew 0.4 percent in 2023 due mainly to a major drought affecting the country and the completion of important works associated with the construction of a pulp mill.
“The Gross Domestic Product (GDP) data is within what was expected,” Martín Alesina, researcher at Ceres (Center for Studies of Economic and Social Reality) told Xinhua, when consulted about the National Accounts Report presented this Thursday by the Central Bank of Uruguay (BCU).
For Alesina, there was downward pressure due to “the effect of the drought, the exchange rate difference with Argentina, the stoppage of the refinery since September and the end of the works on the UPM 2 pulp plant and, associated with this industry, the Central Railway.
In fact, the drought that ended this last southern winter was the worst in the last 70 years, causing losses of almost two billion US dollars for the productive sector, according to official estimates.
The BCU report highlighted, from the production perspective, the negative impact of the Electric Power, Gas and Water (-9.2 percent) and Construction (-5.6 percent) sectors.
The negative pressure “was offset by what UPM started to produce,” said Alesina, alluding to the main private investment in the history of Uruguay that, at full capacity, would make pulp the first exported product in the country. country.
According to the BCU, the Agriculture, Fishing and Mining sectors (5 percent), along with Health, Education and Real Estate Activities (1.1 percent) registered the greatest positive impact on GDP.
Ignacio Umpiérrez, researcher at the Center for Development Studies (CED), agreed that the low growth responded to the impact of the drought, the closure of the state oil company ANCAP’s refinery for technical maintenance and “the diversion of consumption to Argentina due to more than 800 million dollars compared to the historical average.
“This was partially offset by the rebound in agriculture in the fourth quarter of 2023, the incorporation of UPM 2 (pulp mill) in its industrial production and export phase and the dynamism of private consumption,” Umpiérrez assessed in dialogue with Xinhua. .
Private consumption “was the engine of growth in 2023, hand in hand with the increase in real wages and the creation of 40 thousand jobs,” he highlighted.
Alesina agreed that there were positive pressures “due to the recovery of real wages and employed people, which meant that consumption was higher this year than the previous one.”
Final consumption spending showed an increase of 2.8 percent, but there was a decrease in gross capital formation (investment) of 2.7 percent, according to the BCU.
Alesina stressed that “the 0.4 percent growth was actually a little lower than expected,” given that the BCU had revised the 2022 GDP downward due to the impact of the drought during the fourth quarter.
The Uruguayan economy increased by 4.7 percent in 2022 and 5.3 percent in 2021, leaving behind the 6.1 percent drop recorded at the beginning of the pandemic in 2020, which interrupted a historical cycle of 17 consecutive years with GDP growth.
The Government of President Luis Lacalle Pou had recently cut its growth forecast for 2023, to around 0.5 percent, although it expects a “rebound” effect with an increase of 3.5 percent for 2024.
By: Gerardo Laborde XINHUA