Uruguay is one of the more prosperous Latin American countries. The economy has a traditionally strong agricultural sector, with beef and wool being the most important products; dairy exports to other Latin American countries are substantial. Crop farming is widespread, producing mostly cereals, rice, fruit and vegetables.
Manufacturing is concentrated in oil and coal-derived products, chemicals, textiles, transport equipment and leather products. The oil and coal, both for manufacturing and energy consumption (the latter supplemented by Uruguay's own hydroelectricity stations), are imported. Mining is confined to small-scale extraction of building materials, industrial minerals and some gold. The tourism industry brings in just under US$1 billion annually.
Uruguay's economic health depends heavily on that of its two large neighbours, Argentina and Brazil. In August 2002, both Argentina and, to a lesser extent, Brazil were gripped by financial crises. This led to a collapse in the cross-border trade upon which Uruguay is heavily dependent.
The government was forced to take emergency measures in the form of currency devaluation, loan rescheduling and, in an unusually drastic move, closing down the country's entire financial system as it approached meltdown. It also appealed for support from the IMF, which responded with a US$3 billion package. With the worst of the crisis past, Uruguay is now returning to something approaching economic health. Annual growth reached 7.2% in 2007. Inflation in 2007 was 8.5%.
Uruguay is a member of Mercosur, the principal regional trade bloc, as well as the Asociación Latinoamericana de Integración (ALADI) and the Inter-American Development Bank.