Brazil & Southern Cone - June 2011 (ISSN 1741-4431)

The peso looks as though it will break through Ur$18.50/US$ in the next few weeks. Arguably, the strength of the peso is not distorting the economy, because so much of the country's trade is with Brazil, where the Real has also been rising against the US dollar, so the cross-rate (Ur$/Real) has remained steady, at around Ur$11.4 to the Real for most of the year.
Against the dollar, traders and economists in Montevideo polled by the central bank are pencilling further strength, which will take the average rate to below Ur$18.50 for 2011. Only last month (May), the consensus was that the peso would wilt against the dollar and average around Ur$18.75 for the year.
So far this year, the peso has appreciated just over 7.65% against the dollar.
The consensus in Montevideo is that year-on-year GDP growth will be 6.8% in June. This is up from an earlier (May) consensus forecast of 6.4% .The consensus is for overall  GDP growth of 6.3% in 2011 up from 5.85% previously. GDP growth was 2.3% quarter-on-quarter in the first three months, according to official statistics
The consensus on the size of this year's fiscal deficit is also rising. Independent economists now expect a deficit of 1.3% of GDP, up from 1.1% previously.

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