Economics Business Cycle-URUGUAY

Topics: Inflation, Unemployment, Gross domestic product Pages: 1 (443 words) Published: October 26, 2014

Uruguay’s GDP (purchasing power parity) is subpar at $56.27 billion for 2013 and is up from $54.37 billion for 2012, which from a person’s perspective may seem like a significant increase, from a country’s perspective the growth is mediocre. This growth in real GDP ranks Uruguay as 94th world-wide in GDP purchasing power parity. Uruguay’s economy is in an expansionary peak phase of the Business Cycle as evidenced by the fact that GDP (purchasing power parity) was $44.029 billion in 2009 due to the world-wide economic crisis as a result of the United States’ Great Recession. Therefore the 2013 Uruguay rGDP of $56.27 billion shows a strong rebound from a low 2009 $44.029 billion amount. Also, Uruguay’s projected rGDP by the end of 2014 is over $60 billion. Uruguay’s rGDP grew 3.5% in 2013 and that percentage established Uruguay’s growth rate as 98th in the world. Additionally, GDP Per Capital (a key determinant of Aggregate Demand) points to economic expansion in Uruguay. For example, GDP Per Capita was $9,068 in 2008, fell to $9,065 in 2009, grew to $16,100 in 2012, and reached $16,600 in 2013. Further, the current Uruguayan Unemployment Rate is 6.5% as of 2013. This Unemployment Rate is up from 6% in 2012, which places Uruguay further from optimal equilibrium phase of the Business Cycle. However, Uruguay’s Unemployment Rate is much better than in 2008 when it was 7.6% and was above the accepted Natural Rate of Unemployment (NRU) of 4-6%. Indicating economic expansion, the Unemployment Rate has dropped significantly, though inconsistently, as Uruguay’s economy recovers from the impact of the USA Great Recession. The Unemployment Rate dropped to 7.3% in 2009; the 2010 Unemployment Rate was 6.6%; the 2012 Unemployment Rate was 6%. The Unemployment Rate has decreased dramatically in the last four years thus signaling economic growth and justifying the 12:00 diagnosis. Lastly, inflation, which was already extremely high, increased to 8.3% in 2013. The inflation...
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