CORRECTED-Uruguay says to invest $2.5 bln to boost growth

Tue Dec 4, 2012 6:19pm EST

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(Corrects investment sum mentioned by president throughout)

* President says world economic outlook for 2013 poor

* Latest growth data came in below expectations

MONTEVIDEO, Dec 4 (Reuters) - Uruguay's government will channel $2.5 billion in infrastructure investments through state-run companies next year to help limit the impact of a global slowdown on the nation's small economy, President Jose Mujica said on Tuesday.

Uruguay's gross domestic product (GDP) is expected to grow by 4 percent this year and in 2013, according to official forecasts, but expansion was slower than expected in the second quarter and sluggish growth in larger neighbors Brazil and Argentina is hurting.

Mujica, a former leftist guerrilla leader who has stuck to fairly orthodox economic policies, said the outlook for the world economy next year remained poor and that action was required to soften the impact.

"State companies are going to invest like never before in the country's history. And that's no coincidence. For a while we've been seeing there could be a trend toward slower growth," Mujica told an event organized by the nation's labor federation.

"It will be time for public companies, responding to the country's needs, to make positive investments in the country's future," he added.

The $2.5 billion has been earmarked for projects that include the extension of the fiber-optic cable network to households, construction of a regasification plant and a thermal power station, railway infrastructure and port developments.

It will not include ongoing investment in oil exploration, Mujica added.

Despite slower growth rates, nagging inflation remains a concern for policymakers in Uruguay. Consumer prices rose 9.03 percent in the 12 months through November, slowing a touch from October's 9.11 percent 12-month reading, but still outside the central bank's target range of between 4.0 percent and 6.0 percent. (Reporting by Felipe Llambias, writing by Helen Popper; Editing by Peter Galloway)

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