Uruguay: The Other Side of the River

by Dave

Map of UruguayImage via Wikipedia

Latin Business Chronicle.

Uruguay is booming. After growing 7.2 percent y/y in 2007, the Uruguayan economy is poised to grow more than 6 percent y/y in 2008. Foreign investment is pouring into the country, taking advantage of its vast natural resources and tourism potential.

Argentine farmers and international grain companies are descending in hoards to buy up fertile farmland and escape the export tariffs on the other side of the river. The price of farmland spiked four-fold in some parts of the country. Likewise, building developers are transforming the skylines of Punta del Este and Montevideo into the Riviera of the South Atlantic. The massive capital inflows forced the Uruguayan peso to appreciate and international reserves to soar. It also helped overheat the Uruguayan economy, pushing the inflation rate to 8 percent. However, the massive mobilization of resources is allowing Uruguay to overcome the loss of competitiveness and emerge as one of the more affluent societies of Latin America.