Monthly economic report

📈At the end of March, the evolution of the indicators that we have been following was as follows:

Risk country

The Country Risk of Uruguay (measured by the UBI Index published by República Afap) as of 03/31/2022 (last business day of the month), it was not possible to obtain such data, since at the time of writing this report the Afap Republic website. However, based on what was explained in the previous report regarding the tourist season and the international situation, it is presumable that it has increased moderately.


💱 Regarding inflation , the data for March 2022 was known. It showed an index of 250.42, which implies a variation of 1.11% in the month (in the same month of the previous year the variation was 0.62 %), while the accumulated variation of the last twelve months reached 9.38%, rising from that registered in February, which reached 8.85%, for which it was once again outside the target range (3% – 7 %). Likewise, in March 2021, said accumulated twelve-month variation was 8.34%, which shows that with this upturn, inflation now shows an upward trajectory also when viewing said comparison. So far in 2022, the accumulated price variation reached 4.42%.

📌The main incidences in the variation of the month were Food and non-alcoholic beverages (0.68%), Restaurants and Hotels (0.1%), Miscellaneous Goods and Services (0.07%), Recreation and Culture (0.05% ), Transportation (0.06%).

🍱Within Food and non-alcoholic beverages, the increases in Bread and cereals, Meat, Milk, eggs and cheese, Fruits and Legumes and vegetables stand out as a consequence of the international increases derived from the war between Russia and Ukraine. This motivated some first government measures such as the approval of the law that removes VAT from strip roast for a month or the agreement with poultry producers to maintain the price of eggs for the same period. It is not ruled out that there may be other similar measures in an effort to control price increases, such as the project to temporarily remove VAT from common bread, campaign cookies, pasta and noodles.

🏢With reference to Restaurants and Hotels, the variation is mainly explained by the increase in meals based on meat and fish and meals based on flour.

In Miscellaneous Goods and Services, the increases in Personal Care and Articles for personal hygiene stand out.

Regarding Recreation and Culture, the increases in Food for pets, Sports Clubs and Gyms, and Leisure Services stand out.

🚍In the Transportation item, the increases in fuels (Naphtha, Gasoil), Taxi, Airfare, and a drop in the prices of Car Rental and Combined boat-bus ticket had an impact.

📊It is also relevant to reiterate that in the fight against inflation   (out of range, as was said, and that in addition said range for 2022 is reduced from 7% to 6% in its ceiling) the BCU increased the monetary policy rate to 6, 5% (75 basis points), while the Copom (Monetary Policy Committee) anticipated that in its next two meetings it will proceed in a similar way, with which, at the beginning of the second quarter of 2022, the monetary policy rate would be at the 8%.

Exchange rate

💰Regarding the exchange rate, the value of the interbank dollar note as of 03/31/2022 (last business day of the month) is 41,115, which implies a negative variation of 3.33% in the month and an accumulated drop of 8.01% in the year . This trend did not change, despite occasional turbulence arising from the international situation. This negative variation partially cushioned (especially with regard to the international price of oil) what was already mentioned regarding inflation in the first three months of the year, being insufficient to prevent what was previously mentioned. We recall what was already mentioned in the previous report, regarding the devaluation of the Uruguayan Peso against the US dollar was 5.56% in 2021 (below inflation) and that the same in 2020 was 13.4%. This reduction contributed to the already mentioned drop in inflation compared to 2020.

When considering international arbitrations, it was observed that the Euro had a negative variation of 1.62% in the month (it weakened slightly against the dollar as a result of the war situation affecting Europe); the Argentine Peso showed a rise of 3.32% (it continued its previous trend, and weakened against the dollar, in addition to the uncertainty caused by the negotiations with the IMF, which led the blue dollar to continue at historical highs, more than doubling the official price We will have to see how the agreement reached at the beginning of March with the IMF affects the Argentine exchange market, since it continues to be questioned by the Argentine government itself, mainly its Vice President, and has not yet endorsed by Parliament), while the Real had a negative variation of 7.86% (a new strengthening against the dollar). In summary,

In another order, various data referring to economic activity were known, of which we comment on the most relevant:

Working market

The labor market was stable, slightly improving the values ​​exhibited in January.

Indeed, when the data published by the INE for February is known, it can be seen that in that month employment barely recovered from the slight fall of the previous month after four months of recovery. The employment rate rose one tenth of a percentage point (57.7% in December; 57.1% in January, 57.2% in February), while unemployment fell to 7.3% from the 7.4% registered on last month.

Foreign trade

Regarding Foreign Trade , the Uruguay XXI report reveals that in March export applications (including Free Zones) grew 28% in year-on-year terms, which shows that the export dynamism exhibited in 2021 continues at the beginning of 2022. once again the excellent performance of beef and other agro-industrial products.

🥖Particularly noteworthy is the case of wheat, whose sales abroad increased by 120%, due to the combined effect of higher volume and the increase in international prices derived from the war between Russia and Ukraine.

Likewise, we recall the expectations regarding soybeans already mentioned in our previous report.

Another data that was known in the last days was the relative one to the public accounts . In the previous report we mentioned that at the end of 2021 there was a sharp drop in the fiscal deficit, which stood at 4.1% of GDP, almost two percentage points less than at the end of 2020, when it reached a peak of 6 %, due to the measures adopted as a result of the health emergency (tax waivers, unemployment insurance, support for the most vulnerable sectors, among others). Well, with the data as of February/22, the fiscal deficit continued its downward trajectory, standing at 3.8% of GDP.

It is again the lowest value of the fiscal deficit since November 2018, when it stood at 3.8%. It is even below what is projected by the MEF in the Budget and Accountability laws.

It was learned that UTE registered profits of US$ 396 million in 2021, while ANCAP obtained them for US$ 88 million. In both cases, a strong impact had to do with energy sales from UTE to Brazil, and fuel sales from ANACAP to UTE derived from the need to use thermal power plants to meet the aggregate demand from the neighboring country as a result of weather conditions. conjunctural.

Poverty closed 2021 with an indicator of 10.6%, which represents an improvement of one percentage point compared to 2020 (approximately 35,000 people came out of poverty), although the social damage derived from the health emergency has not yet been fully reversed and reach pre-pandemic levels.

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