Economic background

Uruguay’s natural features encourage the development of agricultural production. As a consequence, the primary industrial sector is one of the largest within the manufacturing industry.

However, even though the agricultural sector continues to be very important (10% of GDP in 2005), during the 20 th century the services sector gradually increased its Gross Domestic Product share, which reached 60% of the total in 2005.

Throughout the 20th century, GDP per capita grew at an average annual rate of less than 1%. However, and despite the two economic crises the country suffered (in 1982 and 2002), during the last 30 years the long-term growth rate increased significantly to more than 1.5% (real, per capita terms).

Gross Domestic Product measured in dollars reached US$ 16,796 million in 2005, which considering Uruguay’s total population (3.2 million people) means an annual GDP per capita of US$ 5,176.

During the second half of the 20 th century, inflation was extremely high. In fact, between 1946 and 1996 consumer prices’ annual average growth rate stood above 40%. Amid sounder macroeconomic policies during the last ten years, the government succeeded in curbing inflation. Indeed, inflation showed a downward trend during the 1990’s, reaching one-digit levels in 1998 and it has remained below 10% ever since, with 2002 being the only exception, when consumer prices rose by 26% as a result of a 100% increase in the exchange rate ($/US$).

Regarding foreign trade, merchandise exports stood above US$ 3,400 million in 2005 (FOB values) while merchandise imports reached US$ 3,900 million (CIF values). As Uruguay is not an oil producer country, all the crude oil it needs must be purchased from other countries. In fact, crude oil imports amounted to almost US$ 900 millon in 2005, accounting for more than 20% of total imports.

Uruguay is one of the founding members of the MERCOSUR, a trading zone also formed by Argentina, Brazil and Paraguay. During its first years, the regional integration led to a great dependency of the Uruguayan economy on the region. In fact, by 1998 (prior to the Brazilian devaluation) 50% of total merchandise exports had the region as destination. However, in 2005 the United States became the main market for Uruguayan exports, representing 22% of total merchandise exports.