Chapter I. Executive Summary

This Country Commercial Guide (CCG) presents a comprehensive look at Uruguay’s commercial environment, using economic, political, and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. Government agencies.

Uruguay is a market of over three million people that has the second largest GDP per capita in Latin America. It is the geographical center of MERCOSUR's (the Southern Cone Common Market created in 1991 and composed of Argentina, Brazil, Uruguay, and Paraguay, with Chile and Bolivia as associate members) most densely populated zone, which concentrates the largest block of purchasing power in the region. Uruguay’s capital, Montevideo, is the administrative capital of MERCOSUR, and is becoming a well-located hub for firms looking to export to the MERCOSUR region.

Uruguay has traditionally been a market-oriented economy. The current administration, which took office in March 2000, has said it plans to intensify the economic liberalization process that has been ongoing for a decade. Regional integration (MERCOSUR and FTAA), reduced deficit spending, downsized government and low inflation are common goals of the two political parties in the ruling coalition.

Economic problems in its neighbors hurt Uruguay in 1999 and 2000 and GDP fell 3.2 percent and 1.3 percent, respectively. GDP per capita amounted to USD 6,000 in 2000. The Uruguayan economy struggled to exit a twenty seven-month recession in the first quarter of 2001, and mild growth seemed feasible for CY2001. But as of May 2001, a combination of economic turmoil in Argentina, an outbreak of foot-and-mouth disease and a depreciation of the Brazilian Real will prevent an economic recovery in CY2001. Zero or slightly negative GDP growth is likely for 2001.

A substantial percentage of Uruguay’s trade is with neighboring Argentina and Brazil. Due to MERCOSUR, trade with Brazil and Argentina now accounts for roughly almost half of Uruguay’s overall trade. The United States is the fourth largest exporter to Uruguay after Brazil, Argentina, and the European Union. U.S. sales to Uruguay declined 27 percent since 1998 to USD 330 million in 2000. The U.S. now supplies 10 percent of Uruguay's total imports, a significant reduction from its 12 percent market share in 1998.

Uruguay's inflation rate decreased during the nineties from 130 percent in 1990 to 5 percent in 2000 and inflation of about five percent is projected for 2001. Uruguay was given investment grade status by major risk-rating agencies in 1997 and the ratings were maintained in 1998, 1999 and 2000. Standard & Poor's again confirmed Uruguay’s investment grade status in May 2001 and rated its outlook as "stable."

Despite a poor economic performance over the last few years U.S. exporters should not overlook the good business and investment opportunities in the country. Proximity to Brazil and Argentina, combined with its manageable market size, make Uruguay a good entry point for companies considering MERCOSUR. U.S. products and services are highly regarded. The U.S. is seen as a provider of high quality goods and services with a good reputation for product backing.

Best prospects for U.S. products are chemicals (including agricultural), manufactured goods and machinery, transport equipment, food processing machinery, computer hardware and software (pending passage of copyright legislation presently before the Parliament), office machinery, telecommunications, and medical and laboratory equipment. Uruguay's growing elderly population is a good market for geriatric equipment and services. The growth of tourism, forestry, and agribusiness (especially off-season fruit growing) also provide excellent opportunities for expanding U.S. exports. Opportunities for sales of equipment or services and/or investment exist in the construction and operation of power plants, airports, and forestry related projects.

Country Commercial Guides are available for U.S. exporters from the national trade data bank’s CD-ROM or via the Internet. Please contact stat-usa at 1-800-stat-usa for more information. Country Commercial Guides can be accessed via the World Wide Web at

http://www.state.gov and www.mac.doc.gov. Uruguay’s CCG may be accessed on the Embassy’s web page at www.embeeuu.gub.uy. They can also be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS. U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-usa-trade. End Executive Summary.