Uruguay’s economy grew by 3.1% in 2024 after a drought, but growth is projected to slow to between 2% and 2.5% in 2025. Key sectors contributing to growth included agriculture and energy, but concerns about household consumption and investment remain. Upcoming policy decisions will influence future economic conditions.
In 2024, Uruguay’s economy demonstrated a recovery, expanding by 3.1%, as reported by the Central Bank of Uruguay (BCU). This positive shift follows a challenging year marked by a significant drought. Nevertheless, economists predict a slowdown in growth for 2025, likely reverting to historical rates of slower expansion.
The final quarter of 2024 revealed a year-on-year GDP growth of 3.5%, with a seasonally adjusted increase of 0.3% from the previous quarter. This rebound was attributed to improved agricultural yields, enhanced hydropower output, increased trade activity, and higher pulp production, although a decline in construction, particularly following the completion of a major railway project, offset some gains.
Economists caution that while the growth figures appear promising, they represent a recovery instead of a substantial progression. José Antonio Licandro remarked, “These are good numbers, but Uruguay is not taking off—it’s recovering.” He anticipates that growth in 2025 will be “solid, but at our own pace,” highlighting the nation’s historically modest growth patterns.
The sectors of agriculture, energy, and manufacturing experienced notable growth, with energy expanding by 19.6% and agriculture by 11.3%. External demand significantly fueled growth, particularly reflected in an 8.3% increase in exports.
Looking forward, economists project a slowdown in growth for 2025, estimating rates between 2% and 2.5%. Luciano Magnífico noted, “Without one-off effects like the drought rebound, we expect a more moderate pace.” This forecast is compounded by concerns regarding weak household consumption and diminishing investment.
According to Marcelo Sibille from KPMG, household consumption experienced only moderate growth in 2024, while fixed investment declined despite a slight recovery in the latter half of the year. The BCU also revised prior economic data, adjusting GDP growth for 2023 from 0.4% to 0.7% and for 2022 from 4.7% to 4.5%.
In 2025, domestic consumption and investment are projected to become more pivotal in stimulating growth, especially given potentially less favorable external conditions. Sibille emphasized the necessity for policies that enhance investment and productivity, stating, “The challenge now is to create conditions for faster income growth.”
Economists also stressed the significance of forthcoming policy decisions, including those related to interest rates, wage negotiations, and the national budget due in October, which will heavily influence Uruguay’s economic future. With a per capita GDP estimated at $23,500 and total GDP around $81 billion, Uruguay remains steady by regional standards, yet as El País observes, the challenge lies in transcending its historically modest growth ceiling.
Uruguay’s economy has made a considerable rebound in 2024, growing by 3.1% post-drought, with strong performances in agriculture and energy. However, the forecast for 2025 indicates a return to slower growth rates between 2% and 2.5%, primarily due to anticipated decreases in household consumption and investment. Key policy decisions will be crucial in determining the country’s ability to invigorate economic growth.
Original Source: en.mercopress.com
