Economy of Uruguay explained

Country:Uruguay
Currency:Uruguayan peso (UYU, $U)
Year:Calendar year
Organs:WTO, ALADI, Mercosur, Andean Community (associate)
Group:
Population: 3,444,263 (2023)[3]
Gdp:
  • $87 billion (nominal, 2024)[4]
  • $108 billion (PPP, 2024)
Gdp Rank:
Cpi: 73 out of 100 points (2023)[5] (18th)
Growth:
  • 4.9% (2022)[6]
  • 2.0% 
  • 2.9% 
Per Capita:
  • $23,088 (nominal, 2024)
  • $30,170 (PPP, 2024)
Per Capita Rank:
Sectors:
Inflation: 3.96% (April 2024)[8]
Poverty: 9.1% (2022)[9]
Gini: 40.6 (2022, World Bank)[10]
Hdi:
Edbr: 101st (medium, 2020)[12]
Labor:
  • 1,686,487 (2020)[13]
  • 54.9% employment rate (February 2021)[14]
Occupations:
Unemployment: 7.8% (July 2023)
Industries:food processing, electrical machinery, transportation equipment, petroleum products, textiles, chemicals, beverages
Exports: $11.41 billion (2017 est.)
Export-Goods:beef, soybeans, cellulose, rice, wheat, wood, dairy products, wool
Export-Partners:
Imports: $8.607 billion (2017 est.)
Import-Goods:refined oil, crude oil, passenger and other transportation vehicles, vehicle parts, cellular phones
Import-Partners:
Current Account: $879 million (2017 est.)
Fdi:
  • $44.84 billion (31 December 2017 est.)
  • Abroad: $19.97 billion (31 December 2017 est.)
Gross External Debt: $28.37 billion (31 December 2017 est.)
Debt:57.4% of GDP (2022 est.)[15]
Revenue:17.66 billion (2017 est.)
Expenses:19.72 billion (2017 est.)
Balance:−3.5% (of GDP) (2017 est.)
Credit:
  • Standard & Poor's

    [16] [17]

  • BB (Domestic)
  • BB (Foreign)
  • BBB+ (T&C Assessment)
  • Outlook: Stable
  • Moody's
  • Ba1
  • Outlook: Stable
  • Fitch
  • BB
  • Outlook: Positive
Reserves: $15.96 billion (31 December 2017 est.)
Cianame:uruguay
Spelling:US

The economy of Uruguay features an export-oriented agricultural sector and a well-educated workforce, along with high levels of social spending. Tourism and banking are also prominent sectors; Uruguay acts as a regional hub for international finance and tourism. The country also has a history and representation of advanced workers-rights protection, with unions and the eight-hour work-day protected at the beginning of the 20th century.

90% of the country's population is urbanized, while most of the industry and over half of the population is concentrated in the capital Montevideo.

After averaging growth of 5% annually during 1996–98, Uruguay's economy suffered a major downturn in 1999–2002, stemming largely from the spillover effects of the economic problems of its large neighbors; Argentina and Brazil. In 2001–02, Argentine citizens made massive withdrawals of dollars deposited in Uruguayan banks after bank deposits in Argentina were frozen, which led to a plunge in the Uruguayan peso, causing the 2002 Uruguay banking crisis.

History

19th century

In the 19th century, the country had similar characteristics to other Latin American countries: caudillismo, civil wars and permanent instability (40 revolts between 1830 and 1903), foreign capitalism's control of important sectors of the economy, a high percentage of illiterate people (more than half the population in 1900). Among foreign investments, investors from Great Britain controlled 22% of the land and many majors parts of the industrial infrastructure, including meatpacking and leather industry, infrastructure for water and gas, and transport systems like trolley and 1100 miles of rail.

Reforms after Batlle

José Batlle y Ordóñez, President from 1903 to 1907 and again from 1911 to 1915, set the pattern for Uruguay's modern political development and dominated the political scene until he died in 1929. Batlle introduced widespread political, social, and economic reforms such as a welfare program, government participation in many facets of the economy, and a new constitution.

Batlle nationalized foreign-owned companies and created a modern social welfare system. Income tax for lower incomes was abolished in 1905, secondary schools established in every city (1906), telephone network nationalized, unemployment benefits were introduced (1914), eight-hour working day introduced (1915), etc.[18] By 1929, 84% of manufacturing was concentrated in a handful of industries: meatpacking, leather and wool. Industrial policies further encouraging migration from rural to urban communities, as well as waves of immigrants from southern and eastern Europe. Investment in urban infrastructure in Montevideo and a growing economy, was capped by hosting the first 1930 FIFA World Cup.

Claudio Williman who served between Batlle's two terms was his supporter and continued all his reforms, as did the next President Baltasar Brum (1919–1923). Around 1900 infant mortality rates (IMR) in Uruguay were among the world's lowest, indicating a very healthy population.

Mid-20th century

The economy of Uruguay started in the early 20th century (1920s-1950s) with government policy focused on import substitution industrialization, where the government encouraged and protected national manufacturers to reduce dependency on imports.[19] Generally, manufacturing prospered during this period with growth of 8.4% a year from 1945 to 1954.

By 1956 the middle class was approximately 40% of the population, with urban services and culture, like mass media and cinema, flourishing. However, the policy of import substitution industrialization began to collapse in the 1950s, leading to economic and social unrest.

Anthropology professor Daniel Renfrew describes both the 50s and 60s and dictatorship period (70s and 80s) as economic downturn periods, followed by further economic degradation caused by neoliberalism. Economist Jamie Mezzera disagrees with this interpretation, arguing that between 1968 and 1972, Uruguay was one of the most regulated capitalist economies in the world. In this period, the government massively increased import tariffs and had near-total wage and price controls. The government instituted these policies to avoid the political pressure that would come if they were to devalue their currency.[20] Between 1955 and 1972, economic output in Uruguay stagnated. After the price and wage controls were largely removed in 1973, growth increased by 4.3% per year until 1979.

The policies of the Colorado Party under Julio María Sanguinetti and Jorge Batlle during the 90s and early 2000s, following global trends of neo-liberalization, facilitated a shift from manufacturing and small-scale agriculture, towards increasing monoculture agriculture and services like finance and tourism. However, these policies faded as the regional economic problems in Argentina and Brazil caused a downturn and unemployment from 1998 to 2003. The economic and social crises that followed allowed for the election of the Broad Front a leftist coalition against the neoliberal policies.

Contemporary trends

The number of trade unionists has quadrupled since 2003, from 110,000 to more than 400,000 in 2015 for a working population of 1.5 million people. According to the International Trade Union Confederation, Uruguay has become the most advanced country in the Americas in terms of respect for "fundamental labor rights, in particular, freedom of association, the right to collective bargaining and the right to strike".

Currency

Uruguay has a partially dollarized economy. almost 60% of bank loans use United States dollars,[21] but most transactions use the Uruguayan peso.[22] Today, the Uruguayan peso is minted in coins of 1, 2, 5, 10, and 50 pesos and in banknotes of 20, 50, 100, 200, 500, 1000, and 2000 pesos.

Sectors

Agriculture, textiles and leather

See main article: Agriculture in Uruguay. Throughout Uruguay's history, their strongest exporting industries have been beef and wool. In the case of beef exports, they have been boosted since Uruguay joined the Mercosur agreement in 1991 and the country has been able trade with more distant markets, such as Japan. In 2018, it produced 589 thousand tons of beef.[23] In the case of wool exports, they have not been doing so well in recent years suffering from other competitors in the market like New Zealand and the fluctuations of its demand during the 2008 recession in the developed world.

As timber refining is being kept within the country, forestry has become a growth industry in recent years. In 2018, the country produced 1.36 million tons of rice, 1.33 million tons of soy, 816 thousand tons of maize, 637 thousand tons of barley, 440 thousand tons of wheat, 350 thousand tons of sugar cane, 106 thousand tons of orange, 104 thousand tons of grape, 90 thousand tons of rapeseed, 87 thousand tons of potato, 76 thousand tons of sorghum, 71 thousand tons of tangerine, 52 thousand tons of oats, 48 thousand tons of apple, in addition to smaller yields of other agricultural products.[24]

Liebig Extract of Meat Company ran a very large and influential beef extract factory in Fray Bentos for 100 years.

Software

During the last decades the software industry has developed considerably. Many start-ups have been very successful, such is the case of PedidosYa. Uruguay also exports software; the similar geographic longitude to that of the United States makes it attractive for companies to outsource software development to Uruguayan companies. Other notable Uruguayan software enterprises are: Genexus, Códigos del Sur, Overactive.[25]

Mining

See main article: Mineral industry of Uruguay. Although this is a sector that does not make substantial contributions to the country's economy, in recent years there has been some activity in gold and cement production, and also in the extraction of granite.

Artigas Department is well known for its amethyst and agate quartz varieties mining. During 2010s 20 thousand tons of minerals were extracted with a value of 9 million of US dollars, exported to Germany, United States, Brazil and China.[26]

Plastics

Due to two major investments made in 1991 and 1997, the most significant manufactured exports in Uruguay are plastics. These investments laid the way for most of the substantial exports of plastic-based products which have taken a very important role in Uruguay's economy.

Telecommunications

Despite having poor levels of investment in the fixed-line sector, the small size of Uruguay's population has enabled them to attain one of the highest telecommunication density levels in South America and reach a 100% digitalization of main lines. Although the telecommunications sector has been under a state monopoly for some years, provisions have been made to introduce liberalization and to allow for the entry of more firms into the cellular sector.

Travel and tourism

See main article: Tourism in Uruguay. In 2013, travel and tourism accounted for 9.4% of the country's GDP.[27] Their tourist industry is mainly characterized for attracting visitors from neighboring countries. Currently Uruguay's major attraction is the interior, particularly located in the region around Punta del Este.[28]

Specialties

"With a population of only three million, Uruguay has rapidly become Latin America's outsourcing hub. In partnership with one of India's largest technology consulting firms, engineers in Montevideo work while their counterparts in Mumbai sleep." - The New York Times, Sep 22, 2006.

Trade agreements

Currently in force (Free Trade Agreements / Economic Complementation Agreements)
Mercosur (signed and effective November 1991)
ECA N.º 36 MERCOSUR with (signed December 1996 and effective February 1997)
FTA with (signed November 2003 and effective July 2004)
ECAa N.º 59 with (signed October 2004 and effective April 2005)
ECA N.º 58 MERCOSUR with (signed August 2005 and effective December 2005)
ECA N.º 62 MERCOSUR with (signed July 2006 and effective September 2008)
Comercial Preference Agreement MERCOSUR with (signed January 2004 and effective June 2009)
FTA MERCOSUR with (signed December de 2007 and effective December 2009)
Partial Agreement N.º 63 with (signed December 2012 and effective March 2013)
Comercial Preference Agreement MERCOSUR with SACU (signed September 2011 and effective April 2016)
FTA MERCOSUR with (signed December 2015 and effective September 2017)
ECA N.º 72 MERCOSUR with (signed July 2017 and effective December 2017)
FTA with signed October 2016 and effective December 2018)
Concluded (not in force)
FTA MERCOSUR with (signed December 2011)

Data

The following table shows the main economic indicators in 1980–2021 (with IMF staff estimates in 2022–2027). Inflation below 10% is in green.[36]

YearGDP(in Bil. US$PPP)GDP per capita(in US$ PPP)GDP(in Bil. US$nominal)GDP per capita(in US$ nominal)GDP growth(real)Inflation rate(in Percent)Unemployment(in Percent)Government debt(in % of GDP)
198014.85,050.012.24,139.96.0%63.5%n/an/a
198116.65,594.313.64,589.01.9%34.0%n/an/a
198215.95,347.411.13,727.4-9.4%19.0%n/an/a
198315.65,198.16.12,033.0-5.9%49.2%14.5%n/a
198415.95,273.55.81,920.9-1.5%55.3%14.0%n/a
198516.55,422.05.71,865.10.3%72.2%13.1%n/a
198618.05,912.77.02,302.57.5%76.4%10.1%n/a
198719.66,381.18.82,864.75.9%63.6%9.1%n/a
198820.46,599.99.12,946.40.5%62.2%8.6%n/a
198921.46,896.19.63,088.01.1%80.4%8.0%n/a
199022.37,136.011.23,573.10.3%112.5%8.5%n/a
199123.87,594.213.44,281.13.5%102.0%8.9%n/a
199226.38,333.415.54,890.27.9%68.5%9.0%n/a
199327.78,705.418.05,659.52.7%54.1%8.3%n/a
199430.39,449.321.06,530.07.3%44.7%9.2%n/a
199530.59,448.723.27,176.4-1.4%42.2%10.3%n/a
199632.810,095.724.67,580.65.6%28.3%11.9%n/a
199735.010,665.026.07,925.95.0%19.8%11.6%n/a
199837.011,183.427.68,329.14.5%10.8%10.1%n/a
199936.811,042.626.17,814.5-1.9%5.7%11.2%n/a
200036.911,030.124.87,406.0-1.9%4.8%13.4%n/a
200136.310,837.522.76,776.8-3.8%4.4%15.2%n/a
200234.010,170.014.84,425.1-7.7%14.0%16.8%n/a
200335.010,480.113.13,926.70.8%19.4%17.2%n/a
200437.711,289.814.94,456.85.0%9.2%13.3%n/a
200541.812,471.618.95,638.07.5%4.7%12.1%n/a
200644.913,360.921.36,347.34.1%6.4%10.8%n/a
200749.114,616.225.57,587.96.5%8.1%9.4%n/a
200853.615,945.233.09,808.97.2%7.9%7.9%46.4%
200956.316,653.934.410,181.74.2%7.1%7.8%46.4%
201061.418,069.743.812,899.77.8%6.7%7.0%40.8%
201165.919,306.852.315,331.15.2%8.1%6.3%41.6%
201266.819,489.155.616,213.83.5%8.1%6.3%49.8%
201370.420,475.362.118,049.74.6%8.6%6.5%50.1%
201474.221,491.961.917,908.83.2%8.9%6.6%50.8%
201574.921,614.557.416,565.80.4%8.7%7.5%57.8%
201676.922,092.557.216,448.81.7%9.6%7.9%55.8%
201779.122,637.364.418,431.41.6%6.2%7.9%56.7%
201881.423,204.064.318,338.80.5%7.6%8.4%58.3%
201983.123,617.261.017,341.40.4%7.9%8.9%61.0%
202079.022,361.753.715,208.0-6.1%9.8%10.4%68.3%
202185.924,233.159.316,735.34.4%7.7%9.4%65.1%
202296.827,232.871.220,017.65.3%9.1%7.9%61.2%
2023103.829,109.373.020,463.93.6%7.8%7.9%62.6%
2024108.930,425.774.820,919.52.7%6.4%7.9%63.9%
2025113.731,668.377.621,620.12.5%5.8%7.9%64.1%
2026118.432,882.579.622,122.02.2%4.5%7.9%64.9%
2027123.334,153.782.022,710.12.2%4.5%7.9%64.7%

3.91%

Uruguay in the world

The following table shows the economic rankings of Uruguay compared to the world:

!Index!Source!Rank!Published
Quality of Life IndexNumbeo[37] 42°2024
Human Development IndexUNDP[38] 52°2022
Democracy IndexEconomist Intelligence Unit[39] 11°2022
Global Peace IndexVision of Humanity[40] 46°2020-2022
Prosperity IndexLegatum[41] 37°2021
Corruption Perceptions IndexTransparency[42] 14°2023
Economic Freedom IndexHeritage[43] 34°2022
Global Competitiveness ReportWorld Economic Forum[44] 54°2019
Cost of Living IndexExpatistan[45] 30°2023
Debt Rating[46] MoodysBAA22021
S&PBBB2017
FitchBBB-2020
Developed Country RecognitionWorld BankHigh Income2023
United NationsVery High HDI2021 (2022 report)
Index of Geopolitical Gains and Lossesafter Energy Transition (GeGaLo Index)Overland et al.[47] 6 out of 1562019

See also

References

12. Web site: (Desempleo en Uruguay disminuyó a 7,8% en julio). 5 May 2024 .

External links

Notes and References

  1. Web site: World Economic Outlook Database, April 2019 . . IMF.org . 29 September 2019.
  2. Web site: World Bank Country and Lending Groups . . datahelpdesk.worldbank.org . 29 September 2019.
  3. Web site: Población en Uruguay aumentó 1%: se contabiliza en 3.444.263 habitantes . 2024-07-15 . Uruguay Presidencia . es . 28 November 2023 . https://web.archive.org/web/20231128035627/https://www.gub.uy/presidencia/comunicacion/noticias/poblacion-uruguay-aumento-1-se-contabiliza-3444263-habitantes . live .
  4. Web site: Report for Selected Countries and Subjects: April 2024. International Monetary Fund. imf.org.
  5. Web site: Corruption Perceptions Index . 30 January 2024 . . 15 July 2024 . 30 January 2024 . https://web.archive.org/web/20240130062042/https://www.transparency.org/en/cpi/2023 . live .
  6. Web site: The outlook is uncertain again amid financial sector turmoil, high inflation, ongoing effects of Russia's invasion of Ukraine, and three years of COVID. International Monetary Fund. April 11, 2023 .
  7. Web site: The World Factbook . . CIA.gov . 28 January 2019.
  8. Web site: Índice de Precios del Consumo (IPC). Instituto Nacional de Estadística. 2024-05-03. 2024-05-05.
  9. Web site: Uruguay ratifica baja de la pobreza en el último año. es. Instituto Nacional de Estadística. ine.gub.uy . 2023-03-27. 2024-05-05.
  10. Web site: GINI index (World Bank estimate) - Uruguay . World Bank. data.worldbank.org . 15 July 2024.
  11. Web site: 13 March 2024 . Human Development Report 2023/2024 . live . https://web.archive.org/web/20240313164319/https://hdr.undp.org/system/files/documents/global-report-document/hdr2023-24reporten.pdf . 13 March 2024 . 17 April 2024 . . en.
  12. Web site: Ease of Doing Business in Uruguay . Doingbusiness.org . 2017-01-23 .
  13. Web site: Labor force, total - Uruguay . . data.worldbank.org . 27 April 2021.
  14. Web site: Actividad, Empleo y Desempleo . Instituto Nacional de Estadística. ine.gub.uy . 27 April 2021.
  15. Data cover general government debt, and include debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data include debt issued by subnational entities, as well as intra-governmental debt; intra-governmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment; debt instruments for the social funds are not sold at public auctions.
  16. Web site: Sovereigns rating list . Standard & Poor's . 26 May 2011.
  17. News: How Fitch, Moody's and S&P rate each country's credit rating . 15 April 2011 . Simon . Rogers . Ami . Sedghi . The Guardian . 28 May 2011 . London.
  18. Book: Uruguay. 9780761444824. Jermyn. Leslie. Wong. Winnie. 2010. Marshall Cavendish .
  19. Book: Renfrew, Daniel. Life without lead : contamination, crisis, and hope in Uruguay. 2019. 978-0-520-96824-0. Oakland, California. 51–82. English. Chapter 2: This is Not a Game. 1102765674.
  20. Jamie . Mezzera . FREE TRADE AND MARKETS BUT ONLY AS LONG AS WAGES ARE UNDER CONTROL: THE CASE OF URUGUAY IN THE 70s . Center for Latin American Development Studies . 52 . July 1982 . 1–6 . 10.22004/ag.econ.263626 .
  21. News: Uruguay's Monetary Policy Effective Despite Dollarization . IMF Survey Magazine . 2008-08-28 . March 4, 2012 . Piñón, Marco . Gelos, Gaston .
  22. Book: Macroeconomic Implications of Financial Dollarization: The Case of Uruguay . International Monetary Fund . Piñón . Marco . Gelos . Gaston . López-Mejía . Alejandro . 2008 . 2 . 978-1-58906-727-1.
  23. http://www.fao.org/faostat/en/#data/QL Uruguay production in 2018, by FAO
  24. http://www.fao.org/faostat/en/#data/QC/ Uruguay production in 2018, by FAO
  25. Web site: Discover PedidosYa's success story .
  26. Cernuischi. F.. González. F.. Morales Demarco. M.. Marmisolle. J.. Conti. B.. Bossi. J.. 2018. Breve historia de la exploración y explotación de recursos minerales y energéticos en Uruguay y perspectivas a futuro. es. Revista de la Sociedad Uruguaya de Geología. 21. Sociedad Uruguaya de Geología. 23 July 2022.
  27. Web site: Uruguay - Travel & Tourism Total Contribution to GDP - Total Contribution to GDP - % share. Knoema. 11 June 2015. https://web.archive.org/web/20160304034124/http://knoema.com/atlas/Uruguay/topics/Tourism/Travel-and-Tourism-Total-Contribution-to-GDP/Total-Contribution-to-GDP-percent-share. 4 March 2016. dead.
  28. "Country Reports: Uruguay." Uruguay Country Monitor (2014): 16. Business Source Premier. Web. 7 Dec. 2014.
  29. Web site: A.C.A. - Exportaciones 2006 . 2007-02-13 . dead . https://web.archive.org/web/20070410203347/http://www.aca.com.uy/datos_estadisticos/exportaciones_2006.htm . 2007-04-10 .
  30. Web site: Secretariado Uruguayo de la Lana . 2020-07-28 . https://web.archive.org/web/20200726053239/https://www.sul.org.uy/ . 2020-07-26 . dead .
  31. Web site: Conaprole. 11 June 2015. https://web.archive.org/web/20150613062743/http://www.conaprole.com.uy/. 13 June 2015. dead.
  32. Web site: SAMAN. Principal exportador de Arroz de América Latina. The leading rice exporter in Latin America.. 11 June 2015. https://web.archive.org/web/20150510190131/http://saman.com.uy/. 10 May 2015. dead.
  33. Web site: Desarrollo de Aplicaciones Empresariales Multiplataforma - GeneXus. 11 June 2015. https://web.archive.org/web/20150516175200/http://www.genexus.com/. 16 May 2015. dead.
  34. Web site: Bantotal. 11 June 2015. https://web.archive.org/web/20150428234141/http://www.bantotal.com/. 28 April 2015. dead.
  35. Web site: inicio - localhost. 11 June 2015. dead. https://web.archive.org/web/20160304042834/http://www.gquanam.com/home/index.php?idioma=eng. 4 March 2016.
  36. Web site: Report for Selected Countries and Subjects .
  37. Web site: Quality of Life Index by Country 2023. Numbeo. 2024-07-15.
  38. Web site: 13 March 2024 . Human Development Report 2023/2024 . live . https://web.archive.org/web/20240313164319/https://hdr.undp.org/system/files/documents/global-report-document/hdr2023-24reporten.pdf . 13 March 2024 . 17 April 2024 . . en.
  39. News: 2023-02-13 . Democracy Index 2022: Frontline democracy and the battle for Ukraine . 2023-02-13 . The Economist . en.
  40. Web site: Global Peace Index. Global Peace Index 2022. en-us. 2023-02-13.
  41. Web site: The Legatum Prosperity Index™. www.prosperity.com. en. 2023-02-13.
  42. Web site: Corruption Perceptions Index. www.transparency.org. 31 January 2023 . 2023-02-13.
  43. Web site: Country Rankings: World & Global Economy Rankings on Economic Freedom. www.heritage.org. en. 2023-02-13.
  44. Web site: Reports. World Economic Forum. 2023-02-13.
  45. Web site: Cost of Living Index. Expatistan, cost of living comparisons. en. 2023-02-13.
  46. Web site: Rating: Uruguay Credit Rating. countryeconomy.com. en. 2023-02-13.
  47. The GeGaLo index: Geopolitical gains and losses after energy transition . 10.1016/j.esr.2019.100406 . 2019 . Overland . Indra . Bazilian . Morgan . Ilimbek Uulu . Talgat . Vakulchuk . Roman . Westphal . Kirsten . Energy Strategy Reviews . 26 . 2019EneSR..2600406O . 11250/2634876 . free .