Economic Overview
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
The Uruguayan economy is significantly dependent on its neighbours, Brazil and Argentina. In 2022, GDP increased by an estimated 5.3%, mainly due to an increase in tourism and in agricultural production.The economy is expected to continue growing in the coming years, albeit at a slower pace, with the IMF predicting growth of 3.6% for 2023 and 2.7% for 2024.
In 2022, inflation remained above the target of 7%, reaching an estimated 9.1%. However, that rate should decrease in 2023 and 2024, to 7.8% and 6.4%, respectively. Public debt decreased to 61.2% of GDP in 2022, but it's expected to increase to 62.6% in 2023 and 63.9% in 2024. Moreover, the fiscal deficit slightly increased to 2.7% in 2022, but it should slightly fluctuate in the coming years, reaching 2% in 2023 and 2.3% in 2024. Furthermore, the current account went into an estimated 1.2% deficit in 2022, and that rate is expected to increase to 1.9% in 2023 and 2% in 2024. The economy has diversified in the past few years with the development of the industry sector (particularly the paper industry), as well as commerce and services. The government's fiscal policies are focused on restoring business profitability as a way to encourage investment and foster economic growth. Its priorities include reducing the large fiscal deficit through a programme involving austerity and rationalisation of public spending (particularly through a better management of state-owned companies), while maintaining benefits for the most vulnerable sectors. Other key elements are the commitment to open trade, the reform of labour relations, and regulatory and management changes in public enterprises. Although the pandemic has impacted the Uruguayan economy, it had relatively little impact when compared to other countries in the region. Still, Uruguay's fiscal measures implemented to mitigate the impacts of the pandemic have been effective in boosting economic activity, which has been gradually recovering. Looking ahead, recovery should continue, albeit at a slower pace, due to the fading impact of a low base effect, tighter monetary policy and heightened inflationary pressures.
Uruguay has one of the highest levels of GDP per capita in South America and a developing middle class. 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, from 40% in 2004 to 6.2% in 2016, due to a solid social contract and economic openness. However, there is still room for improvement in terms of financial transparency. The unemployment rate decreased to 7.9% in 2022, as the country recovered from the impacts of the pandemic, and it should remain stable in 2023 and 2024.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 53.56 | 59.32 | 71.89 | 77.31 | 80.81 |
| GDP (Constant Prices, Annual % Change) | -6.1 | 4.4 | 4.9 | 2.0 | 2.9 |
| GDP per Capita (USD) | 15,168 | 16,743 | 20,222 | 21,677 | 22,586 |
| General Government Balance (in % of GDP) | -2.7 | -1.5 | -2.2 | -2.0 | -2.4 |
| General Government Gross Debt (in % of GDP) | 68.2 | 65.6 | 61.0 | 62.3 | 62.7 |
| Inflation Rate (%) | 9.8 | 7.8 | 9.1 | 7.6 | 6.1 |
| Unemployment Rate (% of the Labour Force) | 10.4 | 9.4 | 7.9 | 8.3 | 8.0 |
| Current Account (billions USD) | -0.49 | -1.59 | -1.77 | -1.94 | -1.75 |
| Current Account (in % of GDP) | -0.9 | -2.7 | -2.5 | -2.5 | -2.2 |
Source: IMF – World Economic Outlook Database , October 2021
Country Risk
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