The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
International Monetary Fund. Western Hemisphere Dept.
INTERNATIONAL MONETARY FUND
Uruguay's inflation and inflation expectations exceed the inflation target, and the gap has been widening in recent years. To help bring it to the mid-point of the target, Banco Central del Uruguay (BCU) needs to maintain a tightening bias in addition to strengthening its communication. This paper examined the factors behind the composition of FDI flows to Uruguay and suggested that strong institutions and macroeconomic stability have helped attract FDI to the secondary and tertiary sectors. Flexibility of the labor market, financial deepening, and the quality of infrastructure can further this improvement.