Uruguay faces further dips in growth

Jan. 24, 2013 at 5:01 PM
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MONTEVIDEO, Uruguay, Jan. 24 (UPI) -- Uruguayan President Jose Mujica faced renewed pressure on approval ratings after senior aides revised estimates for earnings from inward tourism weeks after revised forecasts of declining national growth.

Tourist inflows from Latin American and Caribbean countries and international arrivals overall dipped in the first few weeks of the country's summer season, usually a boom period for international arrivals.

Tourism data indicated a 14 percent drop in the period, with no guarantee the decline could be halted as the summer season enters a critical stage. Big-spending Brazilians have been discouraged by recent cutbacks in air service, disruptions in road networks and regional downturn.

Arrivals from neighboring Argentina also suffered during the period. Tourism chief Benjamin Liberoff blamed Argentine government restrictions for the decrease in arrivals from the country.

"Dissuasive measures adopted by the government in Buenos Aires helps to explain the situation" in regard to Argentina, Liberoff said.

He said poor communications had discouraged Brazilians from visiting the country since the collapse of Uruguay's Pluna airline last year. Mujica decided to sell off Pluna after the airline experienced heavy losses, amid labor disputes and strikes in Argentine airports and a court judgment in Brazil that threatened to pull down Montevideo government into a massive compensation claim that was seen likely to run into several billion dollars.

Uruguay's Deputy Minister of Tourism Antonio Carambula has been led into talks with major stakeholders as part of a charm offensive to blunt the potential effect of Argentina's measures to dissuade citizens from traveling abroad and spending precious foreign exchange. Argentine travelers reported having to pay exorbitant rates when converting pesos into U.S. dollars.

Overland arrivals from Uruguay's neighbors also took a hit as tourists accused border businesses of subjecting them to gouging.

Uruguay's growth estimates are increasingly a subject of discussion as private sector analysis data continue to challenge government projections. Earnings projections of 4 percent are widely regarded as optimistic.

Business analysts lowered forecasts for Uruguay's gross domestic product growth in 2013 from an average of 4 percent in December 2012 to 3.86 percent this year after reading Central Bank data.

The World Bank's Global Economic Prospects also said Uruguay's economy is poised to grow 4 percent this year and in 2014. That rate, if achieved, would put Uruguay ahead of Brazil, which is seen likely to produce 3.4 percent growth rate.

However, Uruguay's growth prospects at the projected 4 percent are uncertain.

Analysts said Brazil's frenetic infrastructural spending in preparation for the 2014 FIFA World Cup sport events and the 2016 Olympics may change outlook for both Brazil and its neighbors.

Uruguay this month was the site of a conference of 24 South Atlantic countries to explore new areas for expanding business and trade.

The seventh ministerial meeting of the Peace and Cooperation Zone of the South Atlantic was created in 1986 following a U.N. General Assembly resolution. A plan of action for the group was adapted in Luanda, Angola, in 2007.

The zone members include Argentina, Brazil and Uruguay from South America and Angola, Benin, Cape Verde, Cameroon, Congo, Democratic Republic of Congo, Ivory Coast, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Equatorial Guinea, Liberia, Namibia, Nigeria, Sao Tome and Principe, Senegal, Sierra Leona, South Africa and Togo.

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