Brazil & Southern Cone - April 2012 (ISSN 1741-4431)

Uruguay’s economy grew by an impressive 5.7% year-on-year in 2011, according to the central bank, down from stellar growth of 8.9% in 2010. The growth figure was above the regional average for the seventh consecutive year, and came in spite of the adverse global economic context, but the government still found itself slightly on the defensive. This was because of suggestions that the economy is slowing down, a suspicion compounded by developments in neighbouring Argentina. Real GDP grew by just 3.5% year-on-year in the final quarter, the slowest growth for this period since 2006, and it contracted by 1.9% on the previous quarter.

The government’s economic team was quick to point out that there were specific reasons for the slowdown in the final quarter. The decline, for instance, was heavily influenced by the drought, which impacted hydroelectric power generation. On top of this, the La Teja oil refinery was inactive: it is undergoing maintenance, and it also endured a labour conflict from last August until January this year. The industrial sector contracted by 7.9% and the electricity, gas and water sector by 41.4% year-on-year in the final quarter.