MONTEVIDEO – BBVA analysts have revised their 2016 growth forecast for the Uruguayan economy downward from 2.1 percent to 1.5 percent.

The new estimate, included in the report “Uruguay’s Situation, Second Half 2015,” takes into account the worsening outlook in the region, particularly in Brazil, and “the diminished dynamism of domestic demand” already observed in 2015.

The report said private consumption would remain affected by low levels of confidence and a deteriorating labor market.

The BBVA analysts noted the future “positive effect” on investment from the construction of infrastructure projects (bids for updating Routes 21 and 24 already processed, and six new roadway projects to be offered next year.)

The report also took into account the favorable economic effects of renewable energy sources in 2016, with the new momentum that public-private investment might gain with support from a trust created by the Andean Development Corporation, or CAF, to support infrastructure construction and manage its risks.

The report said that even though the Uruguayan Central Bank, or BCU, had achieved its monetary policy goals, the targets were “still insufficient” to keep inflation within the range set by the bank.

BBVA estimates that inflation will remain above the range of 3 percent to 7 percent for another two years, reaching 9.2 percent in 2015 and 8.5 percent in 2016 due to reduced pressure on demand, easing depreciation and the continuation of a restrictive monetary policy.