Uruguay: Economic Outlook for 2025
Uruguay’s economic outlook for 2025 is of moderate growth, underscored by its business-friendly policies and investment in strategic sectors. However, its full growth potential for the year could be threatened and constrained by global geopolitical developments. With respect to 2024, where its GDP growth reached 2.5%, this year, this rate is expected to improve, if only slightly, to approximately 2.6-2.8% (World Bank Group, 2025). This positive growth outlook will be a result of the continued strength of its export sector, primarily agricultural goods, as well as growing investment in its renewable energy sector, technological innovations and a steady recovery in its tourism sector which is slowly going back to pre-pandemic numbers (ECLAC, 2024).
Background and position in the region
With high per capita income and the largest middle class in Latin America, Uruguay is known to be a relatively stable and wealthy country.
At the start of the 20th century, thanks to robust macroeconomic measures and further benefitting from the commodities boom, it lived through a period of strong economic growth. However, since 2015, this exponential growth has slowly stagnated, due to normalizing commodity prices, the COVID-19 pandemic and a once-in-a-lifetime drought that hit the country at the end of 2022 and carried on well into 2023 (World Bank, 2024). Despite these unfavourable conditions, it has managed to remain resilient, through prudent fiscal frameworks and policies dedicated to attracting foreign direct investment, and indeed, it continues to have one of the lowest sovereign spreads in Latin America.
Uruguay had the 7th highest level of FDI inflows by country in Latin America in 2023 and in terms of FDI project announcements, it was among the top, only after Brazil, Mexico and Chile (ECLAC, 2024).
Political landscape
After the Presidential elections in October 2024, there has been a shift to the centre-left, and Yamandu Orsi was sworn in in March 2025 as the new President of Uruguay (Elliott, 2025). His coalition achieved a majority in the Senate but not in the lower chamber. This does not present a risk to economic growth, since Uruguay has a significant degree of political maturity, and this leads analysts to predict that even with a new administration, in 2025 there will be policy continuity in key economic areas like FDI, fiscal policy and corporate taxes. Indeed, Orsi has promised to avoid sharp policy shifts and sustain growth during his campaign. This translates to political stability and by extension, continued positive expectations for its economy in 2025.
Monetary policy
Uruguay’s Central Bank is largely expected to keep its cautious approach in loosening monetary policy over the next year. This is because inflation is and has been for several years, above the middle of the Central Bank’s target rate range of 3%-6%. It closed 2024 with an inflation rate of 5,5%. To guarantee controlled inflation, together with stable economic growth, throughout this year it is expected to keep interest rates at the current 9.75% mark, while, of course, maintaining an adaptive stance with an eye towards any possible future economic or geopolitical challenges that could hinder further progress. Interest rates in 2024 were at 8.5% since April 2024 but ended the year with a rise to 8.75% (BCU, 2024).
The loosening of global monetary policies should contribute to an easing in pressures on the Uruguayan peso, from economies like the US and the EU, which also had contributed to higher inflation through exchange rate volatility (BBVA, 2024).
Fiscal policy
Uruguay’s fiscal policy for 2025 is predicted to be characterised by debt management. These predictions are based on structural reforms implemented by the government, and generally more prudent spending. Recent years have been dedicated to fiscal consolidation, and these efforts have largely proven successful. In 2024, it had a deficit of 2.2% which is forecast to fall slightly below 2%, marking a likely improvement in its fiscal position (Fitch Ratings, 2024).
The government vocalized its efforts of achieving sustainable development and economic growth and this commitment has been materialised through public spending on key sectors of the economy, including infrastructure, education, healthcare and technology (Elliott, 2025). Domestic investments in infrastructure, specially in renewable energy projects and public transport, will further boost growth, foreign direct investment (FDI) and competitiveness.
In terms of taxes, typical adjustments are expected following a change in administration. However, given what we know from the 2025 budget proposal, corporate taxes are to be maintained at the same level, in order to attract FDI and an overall investor-friendly tax environment. This is to be the case particularly in strategic sectors that attract the most FDI inflows, such as technology and renewable energy (BBVA, 2024). In fact, the incoming President has pledged to continue to focus on attracting investors as well as skilled workers, and without tax increases. Other fiscal priorities for this year include innovation and export diversification (Fitch Ratings, 2024).
Other economic indicators
Another crucial indicator to be analysed for Uruguay’s economic outlook is its unemployment rate. In 2024, it stood at around 7.5%. Some projections suggest a slight decline in 2025, to around or slightly above 7%. This fall will come hand in hand with the growth of the tourism, technology and agricultural sectors of the economy (BCU, 2024).
In its balance of trade, Uruguay will remain resilient, because of its varied exports of agricultural commodities. Beef, rice and soybeans have the benefit of mostly robust foreign demand and therefore, stable global prices (World Bank Group, 2025). Nevertheless, since major trading partners are under the threat of US tariffs, such as China, there are risks of adverse spillover effects from distant market fluctuations. Shifts in trading partners could also in the books for 2025, since trade with the US rose a dramatic 68% over 2024 (Elliott, 2025).
Societal conditions
Despite its economic growth and development over the years, Uruguay still has important societal challenges to tackle, such as high costs of living, inequality and persistent levels of violent crime (Elliott, 2025). Furthermore, according to a report published by the National Statistics Agency, almost 19% of its population was under ‘multidimensional’ poverty, which includes calculations across areas such as education, housing, welfare benefits and income, among others. Income inequality has not reduced in recent years, with the Gini Index staying at around 40.9 points, and although this represents one of the lowest levels in the region, globally, it is considered high (World Bank, 2024).
While Uruguay has a high Human Development Index (HDI) due to progress and higher investment in areas such as education, health and welfare (World Bank, 2024), it is vital for efforts to achieve greater social cohesion and reductions in inequality to continue.
Risks to continued growth
Over 2025, there are risks presented to Uruguay’s growth outlook from global geopolitical developments such as escalating trade tensions. Similarly to most economies, tariffs, even if not directly imposed on the country itself, could lead to inflationary pressures and threaten the further loosening of its monetary policy.
In addition, Uruguay’s economic growth forecasts could be affected by supply shocks related to climate change, similar to the drought it experienced in 2022-2023. These climate-related challenges are a considerable risk for an economy that is deeply reliant on agriculture and renewable energy.
In conclusion, Uruguay’s economic outlook for 2025 is expected to be positive but subject to risks from geopolitical developments like tariff wars, which could trigger further inflation spikes. Its economic performance over this year also depends, crucially, on whether or not new President is able to fulfil his campaign promises of stability and a continued focus on attracting FDI. This remains to be seen, but without a doubt, its perceived stable, low risk and business-friendly environment from investors’ perspectives is not diminishing anytime soon.
References
BBVA. (2024). Uruguay Economic Outlook 2024. BBVA Research. Retrieved from https://www.bbvaresearch.com/wp-content/uploads/2024/06/Uruguay-Econonomic-Outlook_June-24.pdf
BCU. (2024). Informe de Política Monetaria Cuarto trimestre 2024. Banco Central del Uruguay. Retrieved from https://www.bcu.gub.uy/Politica-Economica-y-Mercados/Reportes%20de%20Poltica%20Monetaria/IPOM%202024.IV%20final.pdf
ECLAC. (2024). Foreign Direct Investment in Latin America and the Caribbean 2024. United Nations. ECLAC. Retrieved from https://repositorio.cepal.org/server/api/core/bitstreams/a450f098-bbcb-41d2-88fd-b8e426c92677/content
ECLAC. (2024). Preliminary Overview of the Economies of Latin America and the Caribbean, 2024 Executive Summary. Retrieved from https://www.cepal.org/en/publications/81105-preliminary-overview-economies-latin-america-and-caribbean-2024-executive-summary
Elliott, L. (2025, March 1). Uruguay shifts to center-left as Orsi takes office. (A. Jourdan, & C. Nomiyama, Eds.) Reuters. Retrieved from https://www.reuters.com/world/americas/uruguay-shifts-center-left-orsi-takes-office-2025-03-01/
Fitch Ratings. (2024). Fitch Affirms Uruguay at 'BBB'; Outlook Stable. Rating Action Commentary. Retrieved from https://www.fitchratings.com/research/sovereigns/fitch-affirms-uruguay-at-bbb-outlook-stable-04-06-2024
World Bank. (2024, October 14). The World Bank in Uruguay. Retrieved from worldbank.org: https://www.worldbank.org/en/country/uruguay/overview#1
World Bank Group. (2025). January 2025 Global Economic Prospects. A World Bank Group Flagship Report. Retrieved from https://openknowledge.worldbank.org/server/api/core/bitstreams/f983c12d-d43c-4e41-997e-252ec6b87dbd/content
Written by Laura Rebollo
