Uruguay: Pandemic Pushes Economy Into Recession

Uruguay's economy went into recession after registering a severe drop in its gross domestic product (GDP), the Central Bank (UCB) announced Thursday.

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The South American nation's GDP dropped by 1.4 percent in comparison with 2019, and 1.6 percent respect to last trimester, mainly because of a 5.8 percent shrinking of exports and a 9.2 percent increase of imports.

According to the report, "these results were influenced by measures implemented as of March to contain the spread of COVID-19, which had a significant impact on some service activities."

The GDP is the market value of all final goods and services from a nation in a given year. It broadly offers a general idea of the economy's health. A crisis like this could increase income inequality and therefore poverty.

UCB also assures that the recession will deepen in the second quarter due to the greater impact these measures, which will lead to a drastic drop in several sectors of the country's activity.

This is the third time in five years that the Uruguayan economy enters a recession, but the GDP fall had not been so severe since 2003. Minister of Economy Azucena Arbeleche on May predicted that 2020 would report an economic contraction of at least three percent.

Tourism has been one of the most affected sectors. As UCB explained there was a "reduction in demand made by both tourists and resident households, associated with the health crisis." Commerce, repairs, restaurants, construction, industry, agricultural production, and basic services were other activities that had a performance regression.