Economic Outline

Economic Indicators

Uruguay has the highest income per capita and the largest middle-class share in Latin America, but it faces challenges in boosting growth. The economy grew by 5.3% annually from 2003 to 2014, but only 1% from 2014 to 2019, and 0.7% between 2019 and 2023. According to the Central Bank, Uruguay's economy grew by 3.1% in 2024, driven by improved agricultural yields after the previous year’s drought, higher hydropower generation, increased trade, and greater cellulose production. However, positive results were partially offset by the negative performance of the construction sector, as the Central Railway project, linking UPM's second plant to the Port of Montevideo, was completed. Growth is expected to stabilize at around 2.6% in 2025-2026, converging towards its potential. Private consumption is forecast to remain strong as inflation pressures ease, while fixed investment is projected to increase as global financial conditions gradually improve (World Bank).

The deficit and debt outcomes in 2023 were in line with the fiscal rule targets. Adherence to the rule for four consecutive years helped stabilise the debt-to-GDP ratio despite a series of negative shocks. The pension system reform, approved in May 2023, is expected to stabilize spending in the medium term. According to the latest figures released by the Ministry of Economy and Finance, the fiscal deficit of the consolidated public sector was 4.1% of GDP at the end of last year. By 2026, the fiscal deficit is expected to further decrease to 2.7% of GDP as consolidation efforts continue. Net indebtedness is projected to stay within the legal limit, with public sector debt forecasted at 64-65% of GDP during the period (World Bank). In 2024, inflation ended at 5.49%, within the Central Bank's target range. The Consumer Price Index was slightly above the 2023 figure, which closed at 5.11% (data Central Bank). Average inflation is expected to remain relatively stable over 2025-2026.

Figures from INE show that, in December 2024, the national activity rate was 64.6%, the employment rate was 59.8%, and the unemployment rate was 7.4%. Uruguay has one of the highest levels of GDP per capita in South America and a developing middle class (USD 34,440 in 2024, as per the IMF). 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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