Foreign Direct Investment

According to UNCTAD's World Investment Report 2024, inflows of FDI to Uruguay reached USD 3.42 billion in 2023, in line with the level recorded one year earlier and the third-highest figures ever. At the end of the same period, the total stock of FDI was estimated at USD 38.32 billion, around 49.6% of the country’s GDP. According to data from the Central Bank, the main investing countries are Spain (20.2% of the total stock), Argentina (10.7%), Brazil (10.1%), the Netherlands (9.4%), Chile (5.1%), and China (4.9%). Europe as a whole accounts for 50.2% of the total inward stock. In terms of sectors, the ones receiving the majority of FDI are financial and insurance activities (32.2%), manufacturing industries (26.2%), real estate activities (11.2%), agriculture, livestock, forestry, and fishing (10.9%), and wholesale and retail trade (10.8%). Official governmental figures show that, in the first half of 2024, foreign direct investment was negative, totalling USD -1.76 billion, mainly due to negative values in intercompany loans.

Uruguay appeals to foreign investors because of its favourable investment environment, primarily driven by its adherence to the rule of law, minimal political risk, stable macroeconomic conditions, advantageous geographical positioning, and enticing investment incentives. Foreign investors enjoy the same rights and fiscal incentives as local investors. FDI is free from any restrictions and is not subject to any declaration. Moreover, there is no limit regarding the transfer of profits or the repatriation of capital. Uruguay is a member of MIGA, the Multilateral Investment Guarantee Agency of the World Bank and has set up an investment promotion agency, Uruguay XXI. The country is a regional hub with a strategic location to access the rest of the region. Also, as a member of Mercosur and having free trade agreements with other Latin American nations, Uruguay provides access to a market of more than 400 million people. Other strengths of Uruguay include the highest literacy rate in Latin America (98% of the population) and modern infrastructure. However, there are also some challenges, such as limited flexibility in setting wages, strict hiring and firing practices, a small population, and vulnerability to the economic situation of its neighbours - mainly Brazil and Argentina. Uruguay ranks 62nd among the 133 economies on the Global Innovation Index 2024 and 29th out of 184 countries on the latest Index of Economic Freedom.