Before the coronavirus, there was a relatively positive outlook for Uruguay’s economic activity for 2020, with growth ranging between 1.7% and 2.3%. However, the coronavirus crisis has dramatically deteriorated expectations.

GDP is expected to contract by at least 3,4% and possibly a little more during the year 2020.

Just as Uruguay arrived at this crisis scenario with a fragile fiscal situation, it arrived with an adequate funding profile. Uruguay could get through this crisis without major worries from a financial point of view and would not need, according to the central bank, to go into debt this year. Debt is not expected to be badly affected, although it will increase.

The recovery projected for 2021 will be strong, which again separates the situation in Uruguay from that of the countries of the region. The World Bank predicts that the GDP of Uruguay will recover by 5.5% in 2021. It stresses that there are 3 key factors which will have a positive impact on the Uruguayan economy: the growth of China, which is the main customer ofUruguay); the international interest rate which has fallen and will remain low; and the international prices of products exported by Uruguay which have not fallen as dramatically as oil.

The construction sector, which represents 10% of GDP, was one of the first to resume its activity in mid-April, mainly for large infrastructure projects will be a motor of the recovery accompanied by the agro-industrial sector.