When looking at economic indicators in Uruguay, government officials and businessmen have much to cheer about. In 2010, the economy grew by 8.5 percent giving Uruguay the fourth-highest increase in Latin America. This growth is predicted to continue as officials estimate a growth rate of 5 to 6 percent this year. Some predict the GDP growth rate to be even higher as both domestic and external demand continues to climb at a very healthy pace. There are many reasons that account for the positive growth rate of Uruguay.
Uruguay’s most significant industry is tourism and this ever-important industry continues to expand making a large contribution to Uruguay’s growth. Other service sectors are also having a major impact, particularly software, transportation, and logistics. Help from abroad is another way Uruguay has been able to grow at an increasing rate. Foreign direct investment (FDI) hit a record $1.6 billion last year, up 29 percent from 2009. Uruguay has been closely tied to it neighbor and most important trading partner Argentina, but now Uruguay is receiving investments from other countries. In January, Uruguay landed the second-biggest foreign investment in the country’s history with a joint venture between companies in Finland and Chile. These companies will invest $1.9 billion in Uruguay to build a pulp mill.
In order to continue to attract FDI and foster further economic expansion, Uruguay’s government will have to invest in infrastructure and education. Currently, the government is making efforts to position Uruguay as a regional logistics hub. Uruguay is also creating framework to promote public-private partnerships in many important transportation areas including ports. Energy is another key sector requiring investment as Uruguay relies heavily on imported oil. To correct this problem, the government has announced a five-year goal to generate 50 percent of its energy from domestic, renewable resources. If Uruguay is able to accomplish its long-term development goals, expect the country to maintain a strong position in Latin America’s economy.