Uruguay has a middle income economy, mainly dominated by the State
services sector, an export-oriented agricultural sector and an industrial
sector. Uruguay relies heavily on trade, particularly in agricultural exports,
leaving the country particularly vulnerable to slumps in commodity prices
and global economic slowdowns. After averaging growth of 5% annually
in 1996-1998, in 1999-2001 the economy suffered from lower demand in
Argentina and Brazil, which together account for nearly half of Uruguay's
exports. Despite the severity of the trade shocks, Uruguay's financial
indicators remained stabler than those of its neighbours, a reflection of its
solid reputation among investors and its investment-grade sovereign bond
rating — one of only two in South America.
In recent years Uruguay has
shifted some of its energy into developing the commercial use of IT
technologies and has become the first exporter of software in L. America.