Uruguay will maintain robust growth over the coming quarters,supported by agricultural exports, consumption and an uptick ininvestment. That said, the pace of growth is likely to slow in H217relative to preceding quarters as the effects of a strong harvest fade.
The fiscal deficit will narrow over the coming quarters, driven byan increase in revenues. While expenditure reductions will remainlimited by political opposition, the country’s stabilising sovereigncredentials will support the business environment.
President Tabaré Vázquez will most likely be able to move forwardwith a budget that will aim to narrow the fiscal deficit. However, weakpublic support, union opposition and intraparty divisions will likelyresult in weaker reforms, while gridlock remains a downside risk.