Uruguay’s Economic Rebound: What’s Behind the Positive Outlook?

Uruguay’s economy is expected to experience a strong recovery this year, with growth of 3.7 percent boosted by rising agricultural exports and balanced macroeconomic risks. The International Monetary Fund (IMF) made this prediction, attributing the positive outlook to an update in wages and a narrowing of the product price gap with neighboring Argentina. Despite facing a historic drought in 2022 and 2023, Uruguay has seen an economic recovery due to easing financial conditions and strong private consumption.

Inflation in Uruguay is expected to rise in the second half of 2024, but the Central Bank (BCU) is gradually reducing rates to support economic growth. The IMF emphasizes the importance of continued monetary policy vigilance in order to build credibility and support efforts to de-dollarize the economy.

These economic forecasts come as President Luis Lacalle Pou nears the end of his term, as Uruguay’s constitution does not allow consecutive terms. Amidst political scandals and competition for leadership succession, Uruguay is going through economic challenges with hopes of a strong recovery. As the country recovers from its past struggles, it remains uncertain what challenges will arise in the future.