The announcement of the rail upgrade is good news for the transport sector in Uruguay. After severe neglect, this investment promises to reactivate the railway infrastructure - a significant contribution to the logistics platform of the country. This investment which will target freight trains will particularly benefit trade with Argentina.
The Uruguayan government is planning to invest US$210mn in the recovery and upgrade of the country's railway system with the support of Mercosur, whose contribution amounts to US$83.5mn. Initial work in the Rivera-Pintado line will start in September 2013. The new railway system will pioneer an innovative model by which the infrastructure component will be separate from the actual provision of the transport service. The former will be under the umbrella of the Association of Railways of the State (AFE) while the latter will be controlled by the National Directorate of Railway Transport (DNTF). In addition, regulation is being considered so that private operators can make use of the state railway infrastructure.
|Volatile But Positive Growth|
|Uruguay Nominal GDP (UYUbn) And Real Growth % y-o-y|
With volatile but consistently positive growth since 2002, we anticipate further investment in transport infrastructure to take place, as it has been indicated by Minister of Transport, Enrique Pintado. Uruguay's high dependency on commodities exports left the country in a vulnerable position when Brazil and Argentina - the main commercial partners - fell into a recession at the beginning of the century. However, the country has successfully recovered from the 2002 economic crisis and its membership to Mercosur augur for further growth in the construction industry as the regional block, apart from strengthening trade links, is also investing in infrastructure development among its member states.