Economy of Uruguay

Mother Earth Travel > Country Index > Uruguay > Map Economy History

Uruguay's economy remains dependent on agriculture. Although agricultural production accounts for 6% of the gross domestic product (GDP), agricultural-related products make up more than half of the country's exports. The industrial sector, which produces 17% of GDP, is largely based on the transformation of agricultural products. Leading industrial sectors include meat processing, agribusiness, leather production, textiles, leather footwear, handbags, and leather apparel.

The government's strategy to stimulate growth and meet its debt service obligations is based on exports. Much of Uruguay's trade is with its fellow MERCOSUR members. Uruguay is committed to an open financial system and maintains an exchange rate that floats inside a 12%-wide band; the government intervenes in the exchange market to maintain a peso/dollar devaluation rate of about 2.4% per month.

Recent governments have carried out a cautious program of economic liberalization similar to that of many other Latin American countries. The program has included lowering tariffs, eliminating deficit spending, controlling inflation--reduced from 129% in 1990 to around 3.6% in 2001--and reducing the size of the once-bloated and inefficient government. The Lacalle government implemented a 1991 state reform law, though such efforts were partially stalled when voters rejected the sale of the state telephone company, ANTEL, in a 1992 referendum. The Government of Uruguay intends to foster economic efficiency through demonopolization and cutting red tape. A budget law approved on February 2001 provides for demonopolization of telecommunications, but basic telephony remains a monopoly. It also creates the framework for regulatory offices for telecommunications and electricity, and levels the tax treatment of public and private firms.

In 2001, the government demonopolized oil refining but oil imports will remain a monopoly until 2006. Previous administrations have given the private sector access to areas formerly reserved for the state such as insurance (except for worker's compensation), mortgages, road construction and repair, piped-gas distribution, water sanitation and distribution, cellular telephony and airline transportation. A law on energy sector reform that allows for the private generation of energy was approved in 1997. Transmission and distribution rights (wheeling rights) remain a state monopoly. According to a 2001 study by a well-known think tank, utility demonopolization would create 45,000 new jobs. Lukewarm public support for these policies, the Uruguayan public's traditional caution, and the fragmented political system suggest that such reform efforts will continue at a slow pace.

GDP: purchasing power parity - $28 billion (1999 est.), $31 billion (2000 est.)
GDP - real growth rate: -2.5% (1999 est.), -1.1% (2000 est.)
GDP - per capita: purchasing power parity - $8,500 (1999 est.), $9,300 (2000 est.)
GDP - composition by sector:
agriculture: 10%
industry: 28%
services: 62% (1999)
Inflation rate (consumer prices): 4% (1999 est.), 4.8% (2000 est.)
Labor force: 1.38 million (1997 est.), 1.5 million (1999 est.)
Unemployment rate: 12% (1999), 14% (2000 est.)
Budget:
revenues:  $4 billion
expenditures:  $4.6 billion, including capital expenditures of $500 million (2000 est.)
Industries: food processing, electrical machinery, transportation equipment, petroleum products, textiles, chemicals, beverages
Industrial production growth rate: -4% (1999 est.), -2.1% (2000 est.)
Electricity - production: 5.704 billion kWh (1999)
Electricity - production by source:
fossil fuel:  3.86%
hydro:  95.44%
nuclear:  0%
other:  0.7% (1999)
Electricity - consumption: 5.89 billion kWh (1999)
Electricity - exports: 215 million kWh (1999)
Electricity - imports: 800 million kWh (1999)
Agriculture - products: wheat, rice, barley, corn, sorghum; livestock; fish
Exports: $2.6 billion (f.o.b., 2000 est.)
Exports - commodities: meat, rice, leather products, vehicles, dairy products, wool, electricity
Exports - partners: Mercosur partners 45%, EU 20%, US 7% (1999 est.)
Imports: $3.4 billion (f.o.b., 2000 est.)
Imports - commodities: road vehicles, electrical machinery, metal manufactures, heavy industrial machinery, crude petroleum
Imports - partners: MERCOSUR partners 43%, EU 20%, US 11% (1999 est.)
Debt - external: $8 billion (2000 est.)
Currency: Uruguayan peso (UYU)

SOURCES: The World Factbook, U.S. Department of State

Mother Earth Travel > Country Index > Uruguay > Map Economy History