AFTER long recessions, Brazil and Argentina still cheer when good economic news comes out. In tiny Uruguay, sandwiched between them, it is old hat. On March 22nd the central bank reported that GDP grew by 2.7% in 2017, bringing the country’s growth streak to 15 years, the longest expansion in its history. Uruguay’s growth since 2011, when global prices of commodities started to fall, puts its neighbours to shame (see chart). Its success shows the value of openness, strong institutions and investment in know-how.
Uruguay’s most recent economic disaster was in 2002, after Argentina defaulted on its debt. Argentines pulled their money out of banks in Uruguay, triggering a bank run there. Thanks to a bail-out from the IMF, it avoided default. That won it a lot of trust with investors, says Jesko Hentschel, the World Bank’s director for Argentina, Paraguay and Uruguay.
Thereafter, Uruguay’s leaders realised that the economy needed to diversify. The Broad Front (FA), a leftist coalition that has governed since 2005, began an...Continue reading
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