Uruguay Growth to Slow, Says IMF

The IMF is projecting real GDP growth of 8.0%-8.5% this year, slowing to 5.0% in 2011 and 4.0% thereafter. “Sustaining growth at 4.0% a year over the medium term will require investments to overcome infrastructure gaps and enhance the skills of the labor force,” says the fund in a statement following a visit to Montevideo. The IMF says it welcomes the 2010-14 budget’s focus on reducing public debt, its broad spending priorities (infrastructure, education), and creation of a fund to shield the budget from weather-induced fluctuations in the cost of producing electricity. “A more conservative fiscal stance in 2011-14 – via slower growth in current expenditures—would be feasible and would help moderate domestic demand further, reduce real exchange rate appreciation pressures, and reinforce the government’s objective of reducing the public debt,” it adds. The IMF notes a risk of a worse global or regional economic outlook. The statements follow an IMF Article IV mission headed by Ulric Erickson von Allmen, advisor in the IMF’s Western Hemisphere department.