Uruguay's economy remains dependent on agriculture and services. Agriculture and agri-industry account for 12% of GDP, and for about 70% of total exports. Leading economic sectors include commerce, agriculture and agri-industry (meat processing, wood pulp, rice, soybeans, and wheat) and construction. Though still small, the information software industry is growing rapidly. There are 12 free trade zones, three of which are dedicated to services (for example, financial, software, call centers, and logistics). Uruguay offers U.S. firms significant advantages as a MERCOSUR-region distribution platform.
In 2002, Uruguay went through the steepest economic and financial crisis in recent history, which developed mostly from external factors. Devaluation in Brazil in 1999 made Uruguayan goods less competitive, and an outbreak of foot and mouth disease in 2001 curtailed beef exports to North America. Starting in late 2001, an economic crisis in Argentina undermined Uruguay's economy, with exports to Argentina and tourist revenues falling dramatically. In mid-2002 Argentine withdrawals from Uruguayan banks started a bank run that was overcome only by massive borrowing from international financial institutions. This, in turn, led to serious debt sustainability problems. A successful debt swap helped restore confidence and significantly reduced country risk.
Uruguay's economy resumed mild growth in 2003--with a 0.8% rise in GDP--and has grown robustly since then, with annual average rates of 6.5% in 2004-2008. Growth has been led by private consumption--which followed the recovery in employment and wages--and exports, partially due to strong commodity prices. The global financial crisis slowed growth, but Uruguay managed to avoid a recession and keep a positive growth rate of 2.9% in 2009. Robust growth of over 8.0% is expected for 2010, and the Government of Uruguay forecasts annual growth of about 4.0% for 2011-2015.
Uruguay has traditionally favored substantial state involvement in the economy, and privatization is still widely opposed. Recent governments have carried out cautious programs of economic liberalization similar to those in many other Latin American countries. They included lowering tariffs, controlling deficit spending, reducing inflation, and cutting the size of government. Uruguay's economy is based on free enterprise and private ownership. In spite of some de-monopolization over the past several decades, the state continues to play a major role in the economy, owning either fully or partially companies in insurance, water supply, electricity, telephone service, petroleum refining, airlines, postal service, railways, and banking.
Uruguay has largely diversified its trade in recent years and reduced its longstanding dependency on Argentina and Brazil. It is a founding member of MERCOSUR, the Southern Cone trading bloc also composed of Argentina, Brazil, and Paraguay. The MERCOSUR Secretariat is located in Montevideo.
Uruguay enjoys a positive investment climate, with a strong legal system and open financial markets. It grants equal treatment to national and foreign investors and, aside from very few sectors, there is neither de jure nor de facto discrimination toward investment by source or origin. Investments are allowed without prior authorization, and there is fully free remittance of capital and profits. A decree passed in 2007 provides significant incentives to local and foreign investors. Domestic investment and foreign direct investment (FDI), which have been traditionally low, increased significantly in recent years. About 100 American firms operate in Uruguay and, according to the U.S. Department of Commerce, the stock of U.S. direct investment amounted to $2.9 billion in 2009.
Gross domestic product (GDP): $40.7 billion (2010, IMF); $31.5 billion (2009); $31.2 billion (2008); $23.9 billion (2007); $19.8 billion (2006); $17.4 billion (2005).
Annual growth rate: 2.9% (2009); 8.9% (2008); 7.6% (2007); 4.6% (2006); 7.5% (2005).
Per capita GDP: $12,129 (2010, IMF); $9,457 (2009); $9,357 (2008); $7,209 (2007); $5,977 (2006); $5,254 (2005); $4,146 (2004).
Natural resources: Arable land, pastures, hydroelectric power, granite, marble, fisheries.
Agriculture (9% of GDP): Products--beef, wool, rice, wheat, barley, corn, soybeans, fish, forestry.
Industry (14% of GDP): Types--food processing, electrical machinery, wool, textiles, leather, leather apparel, beverages and tobacco, chemicals, cement, petroleum products, transportation equipment.
Services: Commerce, restaurants and hotels--14% of GDP. Construction--7% of GDP. Other services--56% of GDP.
Trade: Exports (2009, f.o.b.)--$5.5 billion ($6.5 billion including exports of cellulose pulp and beverage concentrates from free trade zones): beef, rice, dairy products, wood, soy and leather. Major markets--Brazil, Argentina, China, Russia, Venezuela, U.S. Imports (2009, c.i.f.)--$6.9 billion: oil, planes, telephony equipment, insecticides, vehicles, paper, plastics. Major suppliers--Brazil, Argentina, China, United States, Venezuela.
Uruguay's 1967 constitution institutionalizes a strong presidency, subject to legislative and judicial checks. The president's term is 5 years. The term is non-consecutive, but former presidents may run again later in subsequent elections. Thirteen cabinet ministers, appointed by the president, head executive departments. The constitution provides for a bicameral General Assembly responsible for enacting laws and regulating the administration of justice. The General Assembly consists of a 30-member Senate, presided over by the vice president of the republic, and a 99-member Chamber of Deputies.
The highest court is the Supreme Court; below it are appellate and lower courts and justices of the peace. In addition, there are electoral and administrative ("contentious") courts, an accounts court, and a military judicial system.
Principal Government Officials
Vice President--Danilo Astori
Minister of Foreign Affairs--Luis Amalgro
Ambassador to the United States--Carlos Alberto Gianelli Derois
Ambassador to the United Nations--Jose Luis Cancela
Ambassador to the OAS--Lujan Flores
Uruguay maintains an Embassy in the United States at 1913 "I" Street NW, Washington, DC 20006 (tel. 202-331-1313, fax 202-331-8142). Uruguay maintains consulates in Chicago, Miami, Los Angeles, New York and San Juan, Puerto Rico.
Type: Constitutional republic.
Independence: August 25, 1825.
Constitution: First 1830, current 1967, most recently amended January 1997.
Branches: Executive--president (chief of state and head of government). Legislative--General Assembly elected by proportional representation consisting of a 99-seat Chamber of Deputies and a 30-seat Senate. Judicial--Supreme Court of Justice.
Administrative subdivisions: 19 departments with limited autonomy.
Political parties/coalitions: Colorado Party, Blanco (National) Party, Frente Amplio, Independent Party.
Suffrage: Universal and compulsory at 18.
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