Uruguay: Economic and Political Overview
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).
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 77.24 | 82.48 | 86.42 | 90.43 | 94.79 |
| GDP (Constant Prices, Annual % Change) | 0.4 | 3.2 | 3.0 | 2.6 | 2.4 |
| GDP per Capita (USD) | 21,657 | 23,053 | 24,080 | 25,121 | 26,253 |
| General Government Balance (in % of GDP) | -2.2 | -3.2 | -2.6 | -2.4 | -2.2 |
| General Government Gross Debt (in % of GDP) | 64.5 | 64.7 | 65.0 | 65.2 | 65.0 |
| Inflation Rate (%) | 5.9 | 4.9 | 5.4 | 5.1 | 4.8 |
| Unemployment Rate (% of the Labour Force) | 8.3 | 8.4 | 8.0 | 8.0 | 8.0 |
| Current Account (billions USD) | -2.91 | -2.27 | -2.22 | -2.13 | -2.03 |
| Current Account (in % of GDP) | -3.8 | -2.7 | -2.6 | -2.4 | -2.1 |
Source: IMF – World Economic Outlook Database, October 2021
Uruguay’s natural resources are very limited, mainly due to the country's size. There is a significant mining industry in the country, which mainly revolves around basalt, dolomite, limestone, quartz, granite, and marble. There is only one gold-producing mine in Uruguay, and the country is a major producer of cement and semi-precious stones, particularly agate and amethyst. Even though only around 11.6% of the land is arable, agriculture is the largest export sector in Uruguay. It accounts for 5.6% of the GDP and employs 8.7% of the active population. Uruguay has rich agricultural land and almost 90% of it is devoted to livestock breeding (cattle, sheep, horses, and pigs). Rice is the main crop, followed by wheat, maize, sugar cane, soybeans, and tobacco. Vegetable and fruit farming are also present throughout the country, as well as a prominent wine industry along the coast of the Rio de la Plata. In 2023-24, Uruguay's main export product was once again beef: the total revenue from the meat sector amounted to USD 2.637 billion (-2.6% compared to 2022/2023), of which 80% was beef, 11% consisted of by-products (primary, residual, and processed), and offals accounted for 4.2% of total exports. For beef, the equivalent volume in carcass weight was 527,902 tons, marking an 11.3% increase compared to the previous year. It is important to note that this value is the second highest of the decade and exceeds the 10-year average by 60,000 tons (467,662 tons – data INAC).
The industrial sector contributes to 16.4% of the country's GDP and employs 19% of the active population. Agriculture and animal food processing account for half of the industrial activity. Other manufacturing activities include beverages (especially wine), textiles, construction materials, chemicals, oil, and coal. Additionally, Uruguay has invested heavily in the paper industry, which is expanding. The manufacturing sector as a whole is estimated to account for 9% of GDP. According to the latest data from the National Institute of Statistics (INE), in 2024, industrial production grew by 1.8%: the biggest contributor was paper manufacturing (+14.5%, +1.8 pp), driven by cellulose. Food product manufacturing rose 2.2% (+0.9 pp), with growth in fruit and vegetable processing. Pharmaceutical products increased 13.2% (+0.79 pp), and computer/electronic products (+24.6%) and leather products (+18.1%) also showed strong performance. On the downside, petroleum refining dropped 13.6% (-0.5 pp) due to the La Teja refinery shutdown, while motor vehicle manufacturing fell 13.4% (-0.4 pp).
The services sector contributes to 66.3% of the GDP and employs 72.3% of the active population, mainly in finance and tourism. Particularly, the region around Punta del Este attracts a large number of visitors, which has driven the rise in building, leading to a construction boom in the area in recent years. However, the country welcomed 3.34 million tourists in 2024, marking a 13% decrease year-on-year (data Ministry of Tourism). The structure of Uruguay's financial system comprises two public banks, eleven private banks, and a diverse array of non-banking institutions.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 8.7 | 19.0 | 72.3 |
| Value Added (in % of GDP) | 5.6 | 16.4 | 66.3 |
| Value Added (Annual % Change) | 5.1 | -3.7 | 1.1 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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