URUGUAY OVERVIEW

ECONOMY

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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. During the 20th century, however, the services sector gradually increased its share of GDP up to almost 60% in 2007, while the agricultural sector accounted for 10% of GDP during that period.


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Throughout the 20th century, GDP per capita grew at an average annual rate of 1%. Despite the two economic crises the country suffered (in 1982 and 2002), during the last 30 years the long-term per capital growth rate in real terms increased by 1.6%.

Gross Domestic Product measured in dollars is estimated at US$22,777 million in 2007, representing an annual GDP per capita of US$6,980.

During the second half of the 20th century, inflation was extremely high. In fact, between 1946 and 1996 the annual average growth rate of consumer prices stood above 40%. Amid sounder macroeconomic policies during the last ten years, the government succeeded in curbing inflation, which showed a downward trend during the 1990's, reaching single-digit levels in 1998. 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 ($/US$).

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Regarding foreign trade, merchandise exports stood at US$4,500 million in 2007 (FOB values), while merchandise imports were approximately US$5,600 million (CIF values). Uruguay is not an oil producing country and all of its crude oil must be imported. Imports of crude oil and other oil products amounted to US$1.100 million in 2006, accounting for more than 20% of total imports.


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Uruguay is one of the founding members of the MERCOSUR, a trading zone, which also includes Argentina, Brazil and Paraguay. During its first years, the regional integration led to a great dependency on its MERCOSUR trading partners. In fact, by 1998 (prior to the Brazilian devaluation) 50% of total merchandise exports were directed to MERCOSUR. However, in 2007 the Euro Zone was the main market for Uruguayan exports, representing 18% of total merchandise exports.

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The general business environment in Uruguay is considered among the best in Latin America, implying strong property rights, simpler business regulation and a lighter tax burden than in most other countries in the region. Uruguay ranks 98th among 178 countries worldwide according to the Doing Business index prepared by the World Bank, and has the third most business-enhancing environment of all Latin American countries. Uruguay also ranks 25th among 177 countries worldwide, and 6th in the Americas, in terms of the Transparency Index prepared by Transparency International.