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- GDP (PPP):
- $50.9 billion
- 5.7% growth
- 6.1% 5-year compound annual growth
- $15,113 per capita
- Inflation (CPI):
- FDI Inflow:
Uruguay’s economic freedom score is 69.7, making its economy the 36th freest in the 2013 Index. Its score is 0.2 point lower than last year, with declines in labor freedom, business freedom, and monetary freedom outweighing improvements in fiscal freedom and freedom from corruption. Uruguay is ranked 4th out of 29 countries in the South and Central America/Caribbean region.
Uruguay continues to perform competitively in many of the four pillars of economic freedom. The foundations of economic freedom are among the strongest in the region and solid in comparison to other countries in the world. The relatively independent and efficient judiciary provides strong protection of property rights and sustains the rule of law. The perceived level of corruption has declined, enhancing the prospects for long-term economic development.
A sensible regulatory environment and policies that support global trade and investment strengthen overall competitiveness, although capital markets remain underdeveloped. Despite the challenging global economic environment over the past five years, Uruguay has restored foreign investment to pre-crisis levels and achieved annual growth rates averaging over 6 percent.
Uruguay has a large middle class, high GDP growth rates, and low levels of extreme poverty. The leftist Frente Amplio won a majority in the 2009 parliamentary elections, and former guerrilla Jose Mujica of the Frente was elected president in 2010. Uruguay is a founding member of MERCOSUR, a Southern Cone trade organization, and signed a Trade and Investment Framework Agreement with the United States in 2007. The economy is based largely on exports of commodities like milk, beef, rice, and wool, but wood and software are gaining export market share. Uruguay offers excellent banking services, including branches of some of the world’s largest banks, but controversy has erupted over an information-sharing agreement with Argentina. State involvement in the economy is substantial, and further deregulation is needed in telecommunications, energy, and public utilities.
Private property is generally secure, and expropriation is unlikely. Contracts are enforced, although the judiciary tends to be slow. The government has established a Settlement and Arbitration Center to handle investment disputes. Regulations protecting copyrights are in place, and aggressive anti-piracy campaigns have led to several successful prosecutions. Government integrity and transparency have been relatively well maintained.
The top income and corporate tax rates are 25 percent. Other taxes include a value-added tax (VAT) and a capital gains tax. The overall tax burden equals 18.1 percent of total domestic income. Government spending remains at around 32.5 percent of GDP. Small budget deficits have been declining, and public debt has fallen to below 55 percent of GDP. Minor changes in the 2012 budget are producing extra revenue, helping to improve the deficit.
Recent reforms have considerably enhanced regulatory efficiency. It now takes five procedures and seven days to start a business, in comparison to the world averages of seven procedures and 30 days. The cost of completing licensing requirements has also been reduced. The non-salary cost of employing a worker is low, but restrictions on work hours are not flexible. Inflation has been relatively high, but monetary stability remains under control.
The trade-weighted average tariff rate is 3.6 percent, and some lingering non-tariff barriers add to the cost of trade. Foreign investments do not need prior authorization or registration, and the investment regime is relatively efficient. The financial sector continues to evolve, but capital markets are underdeveloped and concentrated in government debt. The state continues to influence the allocation of credit.