Uruguay - Future trends
Continuing economic problems in Argentina and Brazil will limit the Uruguayan economy since the majority of the nation's trade is with these countries. The country's continuing recession has made it less attractive to foreign investment. The inability of the government to enact further privatizations also reduces the attractiveness of the nation to foreign investors and prevents competition in certain sectors. The high level of unemployment has caused increased government spending that has itself led to increases in the government's operating deficit and the nation's total debt.
The nation's high standard of living and the high level of education and skill continue to make it attractive to foreign businesses. This is especially true as the Uruguayan government expands its system of free-trade areas. While the economic downturns in Argentina and Brazil have harmed Uruguayan trade, these conditions have also increased the flow of investments from these nations into Uruguay as investors have sought to protect their money. Uruguayan membership in international trade organizations will continue to expand trade as tariffs are reduced. As such, Uruguay has been a strong supporter of the establishment of a Free Trade Area of the Americas.
Uruguay's plans to continue economic liberalization will help the economy become more efficient and productive. The main goals of the government in the economic sphere are directed toward reductions in unemployment, inflation, and deficit spending. Programs to improve the nation's infrastructure, including renovations to airports and transport systems, are also designed to enhance the economic base. The government plans to continue privatization of state-owned industries and to reduce the size of government and the government's share of the nation's GDP.