Fitch affirms Uruguay's rating at 'BBB-' with stable outlook

Inflation remains high with 9.4% annual gain recorded in May

Ovunc Kutlu   | 29.06.2022
Fitch affirms Uruguay's rating at 'BBB-' with stable outlook


The Fitch Ratings announced Wednesday it affirmed Uruguay's credit rating at "BBB-" with a stable outlook.

The global rating agency said Uruguay's rating is supported by its high GDP per capita, institutional strength and robust external finances.

Fitch said it expects the country's central government deficit to fall to 3.1% of GDP in 2022, from 4.3% in 2021, which stood at 5.8% in 2020.

The rating agency also said it estimates Uruguay's economy to expand 4.7% this year to surpass its pre-pandemic levels, after growing 4.4% last year.

Inflation, however, remains high in the country, recording an annual gain of 9.4% in May due to high food and energy commodity prices.

Fitch said it forecasts inflation to end this year at 8.5% and then moderate to 7.3% in 2023.

The agency warned that a substantial rise in the government debt to GDP ratio due to widening fiscal deficit could result in a downgrade.

Improved economic growth and a sustained reduction in inflation, on the other hand, could lead to a positive rating action, it added.

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