Brazil & Southern Cone - 12 August 2003

The IMF believes that the Uruguayan economy is about to emerge from four years of recession. The multilateral said on 4 August that it expects GDP to grow on a quarter-on-quarter basis in the second quarter, repeating a trend seen in Q1 when the economy grew 0.5% despite contracting 9.1% year-on-year. 

Behind the improvement is an better export performance, a rise in production due to import substitution, and a stronger credit environment, which should in turn promote an upturn in private consumption. Montevideo also earned praise for its response to contagion from the Argentine economic crisis, which forced the government to implement an extensive bank restructuring programme earlier this year. The IMF 'commended the authorities for the significant progress made in recent months in containing the crisis, stabilising the economy, and preparing the foundations for a durable recovery'. 

Uruguay's economy is expected to contract 2.0%-2.5% this year against a 10.8% shrinkage in 2002.

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