Uruguay's economy will avoid recession, narrowly

Subject

The near-term economic outlook.

Significance

The statist model preferred by the governing Frente Amplio (FA) coalition clashes with the plan designed by President Tabare Vazquez and his economy and foreign ministers, Danilo Astori and Rodolfo Nin Novoa respectively, to try to attract greater inward investment. This adds to intra-coalition tensions after the defection of a centre-left legislator caused the government to lose its congressional majority.

Impacts

• The fear of losing support may help to concentrate FA minds on smoothing over party splits.
• A new cellulose plant would boost economic growth but not diversification.
• The economy will avoid recession, but growth will not pick up strongly in the near term.