Uruguay’S Economy Faces Subdued Growth Amid Fiscal And Global Pressures

(MENAFN- The Rio Times) Analysts project Uruguay's economy to expand by 2.5% in 2025, unchanged from April's central bank survey median, despite downward revisions by global institutions like the IMF (2.8%) and World Bank (2.3%).

The Ministry of Economy has yet to release official forecasts, leaving uncertainty ahead of budget talks. Last year's 3.1% GDP rebound, fueled by post-drought soybean recovery and cellulose exports, masks structural constraints.

Growth is now settling near Uruguay's 2.5% potential rate, constrained by weakening fixed investment and modest household consumption.

External risks loom: U.S. tariffs threaten trade, while the IMF warns of global slowdowns impacting export-reliant sectors like agriculture (11.3% growth in 2024) and energy (19.6%).

Domestic challenges compound pressures. Public spending flexibility narrows as fiscal deficits persist (projected 2.9% of GDP in 2025), forcing tough choices in wage negotiations.



Economists warn real wage hikes must align with productivity to sustain annual job creation of 15,000–20,000. Inflation remains sticky at 5.7% (March 2025), testing the central bank's 3–6% target range and prompting rate hikes to 9.25%.

The peso faces volatility, with analysts forecasting a year-end exchange rate of US$44.5 (range: US$42.75–46.1). Policy shifts under new leadership, including tighter monetary measures, aim to stabilize prices but risk cooling growth further.

Uruguay's resilience hinges on balancing export diversification against reliance on volatile neighbors like Argentina and Brazil. With per capita GDP stagnant near US$23,500, the nation must prioritize structural reforms to escape its low-growth equilibrium.

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