Panorama econòmic

Economic indicators

The Uruguayan economy is significantly dependent on its neighbors, Brazil and Argentina. The country showed strong resilience during the Covid-19 pandemic and returned to its pre-pandemic level by mid-2021. After growing by 4.9% in 2022, economic activity decelerated to an estimated 1% in 2023 amid tighter financial conditions and the impact of a historic drought that affected agricultural production. In 2024, GDP growth is expected to be bolstered by the resurgence of exports and private consumption. The IMF forecasts growth at 3.3% this year and 2.9% in 2025.

Uruguay undertook significant structural fiscal consolidation during the period of 2020-2022, guided by amendments to the fiscal rule implemented in 2020. In 2023, the fiscal environment has been challenging due to the drought's impact, the reversal of real wage declines in previous years, and the government's tax reduction measures. The IMF estimated that the central government deficit expanded to 2.9% of GDP in 2023, up from 2% one year earlier, but it should gradually decrease to 2.3% by 2025. In April 2023, Congress endorsed a pension reform that, despite featuring long transition rules, will not yield fiscal savings for several years. Nonetheless, this reform stands as a robust testament to fiscal responsibility and enhances the long-term sustainability of the system. General government debt increased to 61.6% of GDP at end-2023 and is expected to remain stable over the forecast horizon. The foreign-currency debt ratio has dropped below 50%, indicating the government's continuous commitment to de-dollarizing the debt structure through a focus on domestic financing sources. Nevertheless, the ratio remains elevated. According to the National Institute of Statistics, the accumulated inflation during the year 2023 totaled 5.11% (compared to 8.3% one year earlier), falling within the target range established by the Central Bank of Uruguay (BCU), which was set between 3% and 6%. The IMF forecasts inflation at 5.9% this year and 5.5% in 2025.

The unemployment rate increased to 8.1% in 2023, from 7.9% one year earlier, and should remain stable in the medium term (IMF). Uruguay has one of the highest levels of GDP per capita in South America and a developing middle class (USD 28,851 in 2022, as per the World Bank). The country has had strong political and social stability for years, backed by a consolidated democracy and strong legal security, which makes it attractive to investors. Furthermore, the population living below the poverty line has decreased significantly in the past decade: at present, the percentage of households residing in poverty stands at 6.4%, as measured by the international poverty line of USD 6.85 per capita per day (World Bank).

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