Economy minister Lorenzo pledges to increase service exports by $1 billion USD and that the sector will dodge the economic crisis
The Uruguayan government will boost service exports beyond tourism and logistics. The government’s measures will focus on improving four sectors: institutions, human rights, the regulatory framework, and Uruguay’s technological infrastructure.
The economy minister, Fernando Lorenzo, announced the initiative Sept. 14th in an exhaustive presentation organized by his office and the Uruguay XXI institute.
In an environment where international demand changes are creating big export fluctuations and tourism in Uruguay has been negatively affected by currency restrictions in Argentina and the crisis in the developed world, the government is exploring new possibilities for stimulating economic growth in Uruguay.
Lorenzo argued that “ignorance” produced an “under evaluation of these processes”. He suggested that the numbers Uruguay’s central bank attributed to the sector in its balance of payments data underestimated the activity in the sector. “We expects some surprises” he said.
Lorenzo reported that a review of total service exports (estimated at $2.57 billion USD in 2010) found that “these figures represented an underestimate of practically $650 million USD”, a difference that “is essentially explained by the exclusion of nontraditional services” (those that don’t fall under tourism or logistics).
Uruguay’s central bank estimated non-traditional exports totaled $587 million but the Economy ministry corrected the total to $1.05 million USD.
The biggest part of these services are called “global”, which includes financial advising, business services (like call centers), audiovisual production, among others. Added to these are financial, commercial and telecommunication services.
If you added tourism and logistics, total service exports reached $3.2 billion USD this year.
In 2011 the number reached $4.2 billon and non-traditional services totaled $1.3 billion, close to 2.5% of GDP.
Plans to boost the future
“In the process of internationalizing this group of sectors linked to services there is going to be a lot of opportunities for economic and social progress in our country”, said Lorenzo. He added that the government is ” beginning to understand” the phenomenon and is ready to support it, now that the development of these services “is a trend that we can’t be left out of” and because Uruguay has several advantages in developing the industry.
Among the advantages Lorenzo listed were, Uruguay’s geographic location and time zone (in between the United States and Europe), the country’s human resource capacity, its competitive cost, its technological infrastructure and its cultural affinity with the principal demand markets.
The government has decided to focus on boosting four sectors: professional process services, information technology and communication, the health and pharmaceutical industry, logistics chain coordination.
Whats more, the government has decided to create specialized development organizations. Already underway is an observatory to identify aspects to prioritize and “end our ignorance”. The government is also creating a “post-investment unit” to facilitate the increased investment in the sector.
The Economy minister also said in his presentation that service exports have preformed better than goods in the latest international economic crisis. According to data he presented service exports have contracted 10% this year whereas exports of goods haven fallen 23% and non-traditional services were especially resistant since: “there was practically no contraction”.
This Uruguay Business Reports news article is a translation of a news story by Marcela Dobal that appeared in the Uruguayan newspaper El Pais. The original news story, in Spanish, is available here. Uruguay Business Reports translation by Donovan Carberry.
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