Uruguay’s Economic Growth and Future Projections: A Review of 2024
Uruguay’s economy grew by 3.1% in 2024, recovering from drought, yet growth is predicted to slow to 2-2.5% in 2025. Key sectors driving this growth included agriculture and energy, though concerns regarding household consumption and investments remain. Policy decisions will play a vital role in future economic trajectories.
In 2024, Uruguay’s economy experienced a growth of 3.1%, recovering from a significant drought the previous year, as per data from the Central Bank of Uruguay. Despite this rebound, experts caution that the growth rate in 2025 is expected to revert to the country’s traditional slower growth pattern, which averages between 2% and 2.5%.
During the last quarter of 2024, the GDP recorded a year-on-year increase of 3.5%, and a sequential increase of 0.3%. This upturn was largely attributed to improved agricultural yields, robust hydropower generation, enhanced trade activities, and a rise in pulp production, although achievements were somewhat counterbalanced by a downturn in the construction sector, primarily following the completion of a significant railway project.
Economist José Antonio Licandro emphasized that these positive figures signify recovery rather than substantial progress, stating, “These are good numbers, but Uruguay is not taking off—it’s recovering.” He also indicated that growth in 2025 would be “solid, but at our own pace.”
The agriculture, energy, and manufacturing sectors demonstrated notable growth, with energy scaling up by 19.6% and agriculture by 11.3%. Growth was principally driven by external demand, particularly through an increase in exports by 8.3%.
Looking forward, analysts predict a deceleration in 2025. Luciano Magnífico from Exante noted, “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. Marcelo Sibille from KPMG indicated that household consumption saw only modest growth in 2024, alongside a decrease in fixed investment despite a slight recovery in the latter part of the year.
Revisions to prior GDP figures have also been made, with the growth for 2023 adjusted from 0.4% to 0.7%, and 2022 revised down from 4.7% to 4.5%. Looking ahead to 2025, it is anticipated that domestic consumption and investment will assume a more pivotal role in stimulating growth, particularly as external conditions may worsen. Sibille remarked on the significance of creating an environment conducive to faster income growth.
Moreover, upcoming policy decisions regarding interest rates, wage negotiations, and the national budget are anticipated to play critical roles in shaping Uruguay’s economic outlook. Despite having a per capita GDP of approximately $23,500 and a total GDP of around $81 billion, positioning Uruguay as a steady performer regionally, the long-standing question remains whether the country can transcend its historical growth limitations.
In conclusion, Uruguay’s economy showcased a noteworthy recovery in 2024, driven by agricultural and energy sector performances. However, expectations for 2025 indicate a return to historically slower growth levels. Analysts express concerns over stagnant household consumption and investment, necessitating strategic policy decisions to foster economic dynamism. Overall, while the recovery marks a positive trend, challenges ahead are significant in determining Uruguay’s path to enhanced growth.
Original Source: en.mercopress.com
