Uruguay Economic Outlook. June 2025

Summary

Uruguay faces a global context of uncertainty and low growth. Domestically, there is a slowdown in GDP, fiscal challenges, and sluggish consumption and investment. However, the external sector is resilient, inflation remains stable, and the peso is showing strength.

Key points

• Key points:
• GDP growth decelerates to 2.1% in 2025. This reflects weak household consumption, driven by limited labor market momentum, a subdued recovery in real wages, and the absence of major new investment announcements.
• Fiscal consolidation stalled in 2024, failing to comply with two of the three pillars that constitute the fiscal rule, thereby revealing the inflexibility of pension-related expenditure. The outlook for 2025 appears challenging, with limited room for manoeuvre to steer public accounts back on track.
• Despite a complex global environment, the external sector remains resilient, supported by a stable current account balance. This is largely due to strong pulp exports and greater diversification of export destinations, which help reduce external vulnerability. Tourism is also expected to normalize in 2025, adding further support to external balances.
• Inflation is projected to reach 5.4% in 2025, remaining above the Central Bank’s 4.5% target, which suggests that monetary policy will remain in a restrictive stance. The Uruguayan peso is expected to retain its relative strength, with the exchange rate projected at UYU/USD 42.1 by December 2025.

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