Between 2004 and 2010, the average real growth of Uruguay's GDP was 6.3% annually, one of the highest rates in the region. Even in 2009, when the global financial crisis battered the region's economies, Uruguay's economy grew 2.6%. According to Fernando Lorenzo, Uruguay's Minister of the Economy and Finance, the country is well positioned to handle the crisis that is affecting developing countries this year.
"Short- and medium-term growth perspectives are excellent, and there is widespread agreement that the country will grow 4% in the coming years," said the minister. An economist, Minister Lorenzo bases his statements on the fact that the government's average debt maturity between 2012 and 2015 is very low, at about 1% of the GDP per year. Lorenzo added that the country has managed to strengthen an already solid fiscal position, which has allowed it to bring down the ratio of total government debt to GDP.
"The gross debt of the entire public sector dropped from 80% of the GDP in 2005 to 57% in 2010, while the net dropped from 51% in 2005 to 31% at the end of last year," the minister said.
Lorenzo credits Uruguay's macroeconomic stability to sustainable growth that has been based on controlling fiscal accounts and decreasing the government's financial vulnerability through a strategy of "de-dollarizaton" of debt and continuous improvement of its profile.
"The Uruguayan government has sufficient liquid assets to cover its needs for at least two years," Lorenzo noted.
The results of Uruguay's policies are clear. The growth that the country has experienced for more than five years is based on a significant increase in investments. "Between 2005 and 2010, foreign direct investment (FDI) in Uruguay totaled nearly 6% of GDP, each year, a very high percentage compared not only to the other countries in the region, but to the world as a whole," the minister said. Uruguay established policies designed to attract new investments and to diversify the export matrix.
"The forestry development plan is an example of Uruguay's political and institutional continuity and stability. In 1987, all the parties passed the Forestry Act aimed at strengthening and boosting the industry within the national economy. Development of the forestry industry was promoted as a way to diversify the production matrix of the agricultural sector. As a result, the level of development achieved...