Uruguay’s economy grew by 3.1% in 2024 after recovering from a drought, but growth is expected to slow to 2%-2.5% in 2025. Strong performances were seen in agriculture and energy, with concerns about household consumption and investment. Future growth will depend on effective policy decisions.
In 2024, Uruguay’s economy rebounded, experiencing a growth of 3.1% following a severe drought in 2023, based on data from the Central Bank of Uruguay (BCU). For the last quarter of 2024, the GDP rose by 3.5% year-on-year and by 0.3% seasonally adjusted from the prior quarter. This recovery was largely fueled by improved agricultural yields, enhanced hydropower generation, increased trade, and more pulp production, although construction faced a decline due to the completion of a major railway project.
Economists caution that while the growth figures are positive, they indicate a recovery rather than sustained economic momentum. José Antonio Licandro remarked, “These are good numbers, but Uruguay is not taking off—it’s recovering.” He emphasized that growth in 2025 would be reliable yet aligned with Uruguay’s typical modest expansion rates.
The agriculture, energy, and manufacturing sectors performed strongest, with energy growth at 19.6% and agriculture at 11.3%. The rise in exports, particularly an 8.3% increase, was a key demand driver. Looking ahead, analysts project a slowdown in growth for 2025, estimating it will range between 2% and 2.5%. Luciano Magnífico from Exante indicated that, “Without one-off effects like the drought rebound, we expect a more moderate pace.”
Concerns have been raised regarding weak household consumption and declining investments. KPMG’s Marcelo Sibille noted that household consumption grew minimally in 2024, with fixed investment experiencing a decline despite some recovery in the latter half of the year. The BCU amended previous GDP growth figures, adjusting 2023 from 0.4% to 0.7% and 2022 from 4.7% to 4.5%.
For 2025, the focus will shift to enhancing domestic consumption and investment, particularly as external conditions may weaken. Sibille highlighted the need for policies that promote both investment and productivity, stating, “The challenge now is to create conditions for faster income growth.” Furthermore, crucial upcoming decisions regarding interest rates, wage negotiations, and the national budget are expected to significantly influence Uruguay’s economic path.
With a per capita GDP of $23,500 and total GDP approximating $81 billion, Uruguay maintains a consistent performance by regional standards. However, as noted by El País, the key question remains whether the country can surpass its historically low growth ceilings.
In summary, Uruguay’s economy saw a significant recovery in 2024 following a drought, with a growth rate of 3.1%. However, forecasts for 2025 suggest a return to slower, traditional expansion rates of 2% to 2.5%. Key sectors displayed strong performance, notably energy and agriculture, but concerns persist over consumption and investment. Future economic growth will require strategic policy decisions to stimulate domestic activity.
Original Source: en.mercopress.com
