Uruguay: Activity speeds up in Q2
GDP reading: GDP growth picked up to 3.8% year on year in the second quarter, from 0.6% in the first quarter and marking a two-year high. On a seasonally-adjusted quarter-on-quarter basis, economic growth gained traction, picking up to 2.0% in Q2, following the previous period’s 0.9% increase and marking the best result since Q1 2023.
Improvement driven by exports: Looking at the details of the release, public consumption rebounded, growing 4.4% in Q2 (Q1: -1.7% yoy). Moreover, fixed investment bounced back, growing 0.1% in Q2, contrasting the 5.9% contraction logged in the prior quarter. Less positively, household spending growth fell to 0.9% in Q2 (Q1: +1.7% yoy), marking the weakest expansion since Q1 2021.
On the external front, exports of goods and services growth –aided by a favorable base effect– accelerated to 14.4% in the second quarter (Q1: +5.1% yoy), which marked the best reading since Q1 2022. Conversely, imports of goods and services contracted at a quicker rate of 4.3% in Q2 (Q1: -3.7% yoy).
Economy to expand in 2024: Looking ahead, our panelists anticipate stronger growth in H2 compared to H1 levels. As a result, 2024’s full-year growth is forecast above 2023’s rate; the agricultural sector, now recovering from last year’s drought damages, is set to drive a boost in exports and rebounding fixed investment will support this trend. That said, our panelist have penciled a slowdown from the projected 2024 figures in 2025, on the back of cooling exports and private consumption. Exposure to La Niña weather phenomenon is a downside risk.
Panelist insight: Commenting on the release, Mario Mesquita economist at Itaú stated:
“Despite the higher-than-expected growth in 2Q24,we have lowered our 2024 GDP growth forecast to 3.0% from 3.5%, reflecting the weaker start to 3Q24. Our 2025 GDP growth forecast has also been lowered, to 2.5% from 3.0%, to reflect a lower statistical carryover”