Country Presentation: National Country Presentation: National OverviewOverview

Scott SwisherScott Swisher

Eastern Republic of UruguayEastern Republic of UruguayRepública Oriental del UruguayRepública Oriental del Uruguay

Geography / DemographicsGeography / Demographics

UruguayUruguay Neighbor Avg.Neighbor Avg. Mercosur Avg.Mercosur Avg.

Total AreaTotal Area 176,220 km²176,220 km² 5,639,427 km²5,639,427 km² 2,554,775 km²2,554,775 km²

% Water% Water 1.5%1.5% 0.875%0.875% 1.768%1.768%

PopulationPopulation 3,460,6073,460,607 115,156,287115,156,287 53,293,15953,293,159

Population Population DensityDensity

19.6 persons/km²19.6 persons/km² 18.4 persons/km²18.4 persons/km² 20.3 persons/km²20.3 persons/km²

Population Population Growth RateGrowth Rate

0.504%0.504% 0.973%0.973% 1.27%1.27%

DemographicsDemographics

UruguayUruguay Neighbor Avg.Neighbor Avg. Mercosur Avg.Mercosur Avg.

Net Migration Net Migration RateRate

-0.21/1000-0.21/1000 0.185/10000.185/1000 -0.24/1000-0.24/1000

Life ExpectancyLife Expectancy 75.9 years75.9 years 72.42 years72.42 years 73.872 years73.872 years

Ethnic GroupsEthnic Groups European (88%), European (88%), Mestizo (8%), Mestizo (8%), African (4%)African (4%)

VariousVarious VariousVarious

Economic StatisticsEconomic Statistics

UruguayUruguay Neighbor Avg.Neighbor Avg. Mercosur Avg.Mercosur Avg.

GDP (PPP)GDP (PPP) $36.56 bil.$36.56 bil. $1107.5 bil.$1107.5 bil. $491.74 bil.$491.74 bil.

GDP/capita (PPP)GDP/capita (PPP) $10,700$10,700 $11,800$11,800 $9,180$9,180

GDP growthGDP growth 7%7% 5.65%5.65% 6.22%6.22%

GDP by sectorGDP by sector Agri: 9.3%Agri: 9.3%

Ind: 33.7%Ind: 33.7%

Serv: 57%Serv: 57%

Agri: 8.75%Agri: 8.75%

Ind: 36.9%Ind: 36.9%

Serv: 54.35%Serv: 54.35%

Agri: 10.58%Agri: 10.58%

Ind: 33.38%Ind: 33.38%

Serv: 56.04%Serv: 56.04%

Economic Statistics, Cont.Economic Statistics, Cont.

UruguayUruguay Neighbor Avg.Neighbor Avg. Mercosur Avg.Mercosur Avg.

Inflation Rate Inflation Rate (CPI)(CPI)

6.5%6.5% 6.5%6.5% 9.56%9.56%

Unemployment Unemployment RateRate

10.8%10.8% 9.9%9.9% 9.78%9.78%

Gov’t RevenueGov’t Revenue $5.203 bil.$5.203 bil. $148.05 bil.$148.05 bil. $71.06 bil.$71.06 bil.

Gov’t Gov’t ExpenditureExpenditure

$5.449 bil.$5.449 bil. $133.75 bil.$133.75 bil. $65.51 bil.$65.51 bil.

Gov’t BalanceGov’t Balance -0.25 bil.-0.25 bil. + $14.3 bil.+ $14.3 bil. + $5.55 bil.+ $5.55 bil.

Economic Statistics, Cont. 2Economic Statistics, Cont. 2

UruguayUruguay Neighbor Avg.Neighbor Avg. Mercosur Avg.Mercosur Avg.

Outstanding Outstanding Public DebtPublic Debt

(% of GDP)(% of GDP)

70.6%70.6% 56.1%56.1% 48.5%48.5%

Current Account Current Account Balance ($USD)Balance ($USD)

-$0.6 bil.-$0.6 bil. $9.65 bil.$9.65 bil. $10.05 bil.$10.05 bil.

Military Spending Military Spending (% of GDP)(% of GDP)

1.71.7 1.951.95 1.721.72

Economic HistoryEconomic History

1900-1930: Rapid development1900-1930: Rapid development Beef, wool exportsBeef, wool exports Advanced welfare stateAdvanced welfare state

1950-1970: Stagnation1950-1970: Stagnation Public sector dominancePublic sector dominance High tariff barriers, ISIHigh tariff barriers, ISI

1973-1985: Military government1973-1985: Military government High fiscal deficits, extensive borrowingHigh fiscal deficits, extensive borrowing Deregulation, privatizationDeregulation, privatization Export promotionExport promotion

Regional Free Trade Areas (FTAs)Regional Free Trade Areas (FTAs) Mercosur (Southern Common Market)Mercosur (Southern Common Market)

1985 Agentina-Brazil PICE agreement1985 Agentina-Brazil PICE agreement 1991 Treaty of Asunc1991 Treaty of Asunciónión 1994 Protocol of Ouro Preto1994 Protocol of Ouro Preto

Union of South American Nations (Unasur)Union of South American Nations (Unasur) Cusco DeclarationCusco Declaration Mercosur + Andean Community = UnasurMercosur + Andean Community = Unasur Single currency, single market, etc.Single currency, single market, etc.

Organization of American States (OAS)Organization of American States (OAS) Founded 5 May 1948Founded 5 May 1948 Drafting of FTAADrafting of FTAA

Fiscal PolicyFiscal Policy Large-scale SOEsLarge-scale SOEs

1985-1995: end of transportation, insurance SOEs1985-1995: end of transportation, insurance SOEs Popular resistance against privatizationPopular resistance against privatization Telecommunications, water, electricity, energyTelecommunications, water, electricity, energy

1985: Restoration of civilian government1985: Restoration of civilian government IMF strategies, “Washington Consensus”IMF strategies, “Washington Consensus” Inflation/unemployment problemsInflation/unemployment problems Free-trade areas, FDIFree-trade areas, FDI

Debt control since 1988Debt control since 1988 Limited successLimited success Renegotiation, forgiveness, restructuringRenegotiation, forgiveness, restructuring

Gov’t Revenue/Expense (LCU) 1995-Gov’t Revenue/Expense (LCU) 1995-20052005

Time (years)

Gov’t Balance (LCU) 1995-2005Gov’t Balance (LCU) 1995-2005

Time (years)

Gov’t Balance (% of GDP) 1990-2005Gov’t Balance (% of GDP) 1990-2005

Time (years)

Gov’t Debt (% of GDP) 1995-2005Gov’t Debt (% of GDP) 1995-2005

Time (years)

Monetary PolicyMonetary Policy

LCU: Uruguayan peso (UYU)LCU: Uruguayan peso (UYU) History of depreciationHistory of depreciation Revaluations in response to hyperinflationRevaluations in response to hyperinflation

Dollar as Dollar as de facto de facto currencycurrency >90% of private savings is Dollar-denominated>90% of private savings is Dollar-denominated Selectively used as unit of exchangeSelectively used as unit of exchange

Central Bank of Uruguay Central Bank of Uruguay (Banco Central del Uruguay)(Banco Central del Uruguay)

Precursor, BROU Precursor, BROU ((Banco de la República Oriental del Banco de la República Oriental del Uruguay)Uruguay)

Founded 1967Founded 1967 Dollarization hinders monetary policyDollarization hinders monetary policy

Exchange Rate PolicyExchange Rate Policy

1973-1985: “Crawling peg”1973-1985: “Crawling peg” ““Tablita” – table of future values Tablita” – table of future values Pegged to the USDPegged to the USD

1985-2002: “Sliding range”1985-2002: “Sliding range” Gov’t will intervene to maintain range of valuesGov’t will intervene to maintain range of values So-called “dirty float”So-called “dirty float”

2002-present: Free floating exchange rate2002-present: Free floating exchange rate Hopes for de-DollarizationHopes for de-Dollarization LCU appreciation agitates exportersLCU appreciation agitates exporters Sensitivity to ER fluctuationsSensitivity to ER fluctuations

Social PolicySocial Policy

Pre-1990: Welfare statePre-1990: Welfare state Extensive SOEsExtensive SOEs Reliance on public sectorReliance on public sector Protection of workersProtection of workers

Post-1990: PrivatizationPost-1990: Privatization Private pension plansPrivate pension plans Popular resistancePopular resistance SOEs still about 18% of GDPSOEs still about 18% of GDP

Social security systemSocial security system Sparse union legislationSparse union legislation National retirement ageNational retirement age

Ministry of HealthMinistry of Health Free medical careFree medical care Relatively low mortality rateRelatively low mortality rate Water utility is SOEWater utility is SOE

Education/culture secretaryEducation/culture secretary Promotion of cultural activityPromotion of cultural activity Maintenance of venuesMaintenance of venues

Ministry of HousingMinistry of Housing Provision of public housingProvision of public housing Combat urban slumsCombat urban slums

External RelationsExternal Relations

Geographic position between Argentina and BrazilGeographic position between Argentina and Brazil Uruguay as a “buffer zone” historicallyUruguay as a “buffer zone” historically Covariance with neighboring economiesCovariance with neighboring economies

Dependence on trade with neighborsDependence on trade with neighbors Cause of 1999-2002 economic crisisCause of 1999-2002 economic crisis Relative size of Uruguayan economyRelative size of Uruguayan economy

Commitment to FTAsCommitment to FTAs Active partner in Mercosur/Unasur/OASActive partner in Mercosur/Unasur/OAS Need for export markets, FDINeed for export markets, FDI ALADI membershipALADI membership Positive relationship with investorsPositive relationship with investors

Democracy, pluralism, neutrality, multilateralism Democracy, pluralism, neutrality, multilateralism

ReferencesReferences Bértola, L. (2003). Bértola, L. (2003). An overview of the economic history of Uruguay since the 1870sAn overview of the economic history of Uruguay since the 1870s .. Retrieved May 13, Retrieved May 13,

2007, from 2007, from http://eh.net/encyclopedia/article/Bertola.Uruguay.final Encyclopedia Britannica. (2007). Encyclopedia Britannica. (2007). Uruguay.Uruguay. Retrieved May 13, 2007, from Retrieved May 13, 2007, from

http://search.eb.com/eb/article-9108768 Encyclopedia of the Nations. (2001). Encyclopedia of the Nations. (2001). Uruguay.Uruguay. Retrieved May 13, 2007, from Retrieved May 13, 2007, from

http://nationsencyclopedia.com/economies/Americas/Uruguay.html Gocurrency.com. (2004). Gocurrency.com. (2004). What is the uruguayan peso (UYU)?What is the uruguayan peso (UYU)?.. Retrieved May 13, 2007, from Retrieved May 13, 2007, from

http://www.gocurrency.com/countries/uruguay.htmhttp://www.gocurrency.com/countries/uruguay.htm Hudson, Rex A. and Sandra W. Meditz. (1992). Hudson, Rex A. and Sandra W. Meditz. (1992). Uruguay: A country study.Uruguay: A country study. Retrieved May 13, 2007, from Retrieved May 13, 2007, from

http://countrystudies.us/uruguay/http://countrystudies.us/uruguay/ Instituto Nacional de Estadistica - Uruguay. (2007). Instituto Nacional de Estadistica - Uruguay. (2007). Anuario estadístico 2006Anuario estadístico 2006.. Retrieved May 13, 2007, from Retrieved May 13, 2007, from

Instituto Nacional de Estadistica - Uruguay Instituto Nacional de Estadistica - Uruguay Ministerio de Economía y Finanzas. (2007). Ministerio de Economía y Finanzas. (2007). Información económicaInformación económica.. Retrieved May 13, 2007, from Retrieved May 13, 2007, from

http://www.mef.gub.uy/indicadores.phphttp://www.mef.gub.uy/indicadores.php The CIA. (2007). The CIA. (2007). CIA world factbook: Uruguay.CIA world factbook: Uruguay. Retrieved May 13, 2007, from Retrieved May 13, 2007, from

https://www.cia.gov/cia/publications/factbook/geos/uy.htmlhttps://www.cia.gov/cia/publications/factbook/geos/uy.html The Economist: Economist Intelligence Unit. (2007). The Economist: Economist Intelligence Unit. (2007). Uruguay country report.Uruguay country report. Retrieved May 13, 2007, from Retrieved May 13, 2007, from

http://store.eiu.com/country/UY.html?ref=country_listhttp://store.eiu.com/country/UY.html?ref=country_list The International Monetary Fund. (2007). The International Monetary Fund. (2007). Uruguay and the IMF.Uruguay and the IMF. Retrieved May 13, 2007, from Retrieved May 13, 2007, from

http://www.internationalmonetaryfund.com/external/country/ury/index.htmhttp://www.internationalmonetaryfund.com/external/country/ury/index.htm The World Bank. (2007). The World Bank. (2007). Uruguay data.Uruguay data. Retrieved May 13, 2007, from Retrieved May 13, 2007, from http://www.worldbank.org/uyhttp://www.worldbank.org/uy The World Bank. (2007). The World Bank. (2007). World development indicators online.World development indicators online. Retrieved May 13, 2007, from Retrieved May 13, 2007, from

http://devdata.worldbank.org/dataonline/http://devdata.worldbank.org/dataonline/