First of all, congratulations to everyone in Uruguay, once again you passed through an election in a correct and ordered fashion. I’m proud.
Second of all, I’m glad to see change, but I’m deeply worried about the implications for the future of the country.
I see two options are possible for the next 10 years of Uruguay, first 5, yes, a new government a new vision, a lot will have to change regarding economics.
That… worries me, the population as a whole is not good understanding numbers, tables values, and global economics, nor they care.
What do I mean by that:
What does this tell me? The next quarter will be crucial to the Uruguayan economic forecast, applying some of my Forex knowledge, if the next period the GDP tanks, I believe we’re under a clear market downturn influx that could lead to a slowdown, wouldn’t call it a recession until the end of 2020, but a clear downturn.
This could complicate things for the new in-office candidate since shifting the economy quickly enough to shift this will prove challenging if not impossible, not to mention current existing contracts that must be honored.
Finally… our beloved rating, if we follow the economy of the region things might not look that bright, but doesn’t mean they are dim. They just mean, adjusting belts, economy and maybe cutting down cost on projects and subsidies. The billion-dollar question is… what will need to be cut.
The tax pressure on the population is humongous and adding more taxes doubtfully is an option… not to mention the classic practice of adding “hidden” taxes through public company’s bills.
Why is this such a challenge? lets play the classic politics chess. The population will remember two periods mainly, the beginning and the end. Humans as everyone else are summary biased, which means if you start with the left, but end with the right foot… well you’re in business. If you start with the right and end with the right… what trick did you use? and finally, what cards are you going to play and when?
Why what cards are you going to play and when? simple, depending on the possible cards it’s crucial to play them right if the next government isn’t airtight perfect… then guess who won’t be the next candidate for the election of 2025? you guessed it, the newly elected president and his people.
This means, without a perfect government the coalition is at risk, not to mention if the same fails… things will get extremely complicated not to mention what a tight election this was.
Hopefully, they’ll prove me wrong, but switching gears and turning around an economy is hard to do, extremely harder in 5 years and coming out victorious.
Using simple statistics, I think Uruguay is headed for a slight recession, alarm bells will sound and things are going to be found on the previous governments. The good thing? Uruguayans are good at shifting this, and as cats landing with their 4 feet, maybe with a few scratches but they’ll land with their four feet.
Regarding investing? please go ahead, Uruguay takes care of its investors and money and even without a perfect economic forecast, Uruguay remains to be a gem in the south and hopefully they’ll prove my theory right they will play the right cards and come out ahead while pulling new investment in.