Uruguay: back on track.

Uruguay appears to be on the road to recovery from its 2002 economic implosion. Foreign direct investment, which shrank 11% five years ago, has risen every year since, growing by 7.3% during 2006. Gross domestic product is on the rise, too. The country restructured its debt burden a couple of years ago. Furthermore, the government has become more fiscally responsible and has pushed through tax reforms that made it more attractive to investors, says Sebastian Briozzo, an analyst at the Standard & Poor's ratings agency in Argentina. While trying to tap new export markets like the United States, Uruguay remains a small economy and largely tied to Brazil and Argentina. "These are not radical changes but they are positive changes," Briozzo says.

Still, Botnia, a pulp manufacturing joint venture among Finnish companies, is waiting to invest US$1.10 billion in Uruguay, quite a figure for such a small economy Argentina is protesting the mill, and the two countries are working it out. Should it go ahead, others might follow, which would be a real boost. "The number that should impress you is the construction of Botnia," Briozzo says.

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