Uruguay - Overview
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After having experienced an annual growth higher than 6% in the years 2004-2008 and being affected by the global economic crisis and a strong drought, Uruguay has kept a positive growth since 2009, supported by the increase of public expenditures and investments. Thanks to the rebound of exports and the dynamism of domestic demand, the revival was quick and vigorous. The growth has reached 4% of the GDP in 2013 after 3.5% in 2012.
The 2010-2014 budgets have placed emphasis on the reduction of the public debt, the increase of expenditures in infrastructures and education, the creation of funds that will permit to face the fluctuations in the cost of electricity production due to bad weather. In the meantime, in order to encourage growth, the government is seeking to develop investment projects in the energy and transport sectors promoting public/private partnerships.
Uruguay has on one of the highest GDP per capita in South America, the unemployment rate was 6.1% of the active population in 2013. The population still living beyond the poverty line went from 40% in 2004 to 12% in 2013.
The industrial sector has contributed to 21.5% of the country's GDP in 2013 and employed around 22% of the active population. Agriculture and animal food processing account for half of the industrial activity, which represents about one fourth of the GDP. Other manufacturing activities include beverages (especially wines), textiles, construction materials, chemicals, oil and coal.
Services contribute to 71% of the GDP and employs nearly 70% of the active population, mainly in the financial services and tourism sectors.
Foreign trade overview
its economy is based on industry, trade and banking services (in the capital Montevideo), as well as agriculture, livestock farming (in the center of the country) and tourism (East). Meat and cereals represented 30% of all exports in 2013 and paper industry around 7%. Tourism provides an large inflow of foreign currency, and it contributed to more than 6% to the 2013 GDP. The economy has diversified in the past few years and this is benefiting exports.
Uruguay's main clients in 2013 were China, Brazil, Argentina, and the European Union. The commodities exported are mainly meats, dairy products, leather and raw skins, cereals and wool.
The country's main suppliers are Argentina, Brazil, China and the United States. The country mainly imports mineral fuels and oil, machinery, electric & electronic equipment, vehicles and plastics. Structurally in deficit, Uruguay's trade balance has seen an improvement in 2013 due to the growth in exports.
Traditionally low, FDI inflows in Uruguay increased rapidly and regularly in the recent years, reaching 6% of the country GDP in 2008. They petered out for a year under the effect of global recession and have been progressively recovering since 2010. In 2013 FDI reached USD 2.7 billion. The government extended its economic plan of the previous years in 2013, which reassured the business environment by prudent budget and monetary policy, accompanied by a structural reforms program aiming to attract foreign investments.
Foreign investors benefit from the same rights and fiscal incentives as local investors. Foreign investments enjoy a total freedom in Uruguay and they are not subject to any declarations and there is not a limit regarding the transfer of profits or repatriation of capital. Uruguay is a member of MIGA, the Multilateral Investment Guarantee Agency and also a member of the International Arbitration Center in relation to investments that depend from the World Bank.
Foreign investment are attracted to the country's political stability, business climate and a skilled workforce.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).