MONTEVIDEO, Dec 16 (Reuters) - Uruguay on Wednesday cut its forecast for economic growth this year to 2 percent from a previous estimate of 2.5 percent due to economic troubles in its top trade partners Brazil and Argentina as well as the slowdown in China.
The economy ministry also raised its forecast for Uruguay’s fiscal deficit to 3.6 percent from a previous estimate of 3.3 percent due to lower tax revenue as consumption decreases.
The ministry nonetheless highlighted the fact that the cattle-ranching country’s economy appeared to be recovering from its contraction of 0.3 percent on the year in the second quarter. The economy grew 0.6 percent in the third quarter, official data this week showed.
“Uruguay is among the (Latin American) countries least hurt by the international situation. Forecasts indicate Latin America will contract by 1 percent this year while we are estimating growth of 2 percent,” said Economy Ministry Undersecretary Andres Masoller. “It is moderate growth.”
Masoller said Uruguay still aimed to reduce the deficit by one percentage point by 2019 to 2.5 percent.
“Tax revenue is falling more than we expected due to the decrease in consumption and this is the issue we are most concerned about and most focusing on,” he said.
JP Morgan said on Wednesday it expected Uruguay’s economic growth to remain weak in 2016 due to regional headwinds “yet still comparing favorably to Brazil, where a significant full-year contraction is widely predicted”.
The U.S. bank predicted the Uruguayan economy to grow 1.2 percent next year after expanding 1.5 percent this year. (Reporting by Malena Castaldi; Writing by Sarah Marsh; Editing by Andrew Hay)