Economic and Political Overview

flag Uruguay Uruguay: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

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 2021, GDP increased by an estimated 3.1%, mainly due to a rise in household spending and fixed investment, and well as an increase in exports of goods and services paired with a decrease of imports of goods and services. However, it should be noted that the pandemic had relatively little impact on the Uruguayan economy when compared to other countries in the region, which is why the country experienced a more modest economic recovery than its neighbours in 2021. Still, the economy is expected to recover in the coming years, with the IMF predicting growth of 3.2% for 2022 and 2.7% for 2023.

In 2021, inflation remained slightly above the target of 7%, reaching an estimated 7.5%. However, that rate should decrease in 2022 and 2023, to 6.1% and 5.4%, respectively. Public debt is at 67.5% of GDP, but it's expected to increase to 68.8% in 2022 and 70% in 2023. The fiscal deficit slightly decreased to 3.7% in 2021, and it should continue that downward trend in the coming years, reaching 3.2% in 2022 and 2.5% in 2023. Furthermore, the current account went into an estimated 1.3% deficit in 2021, but that rate is expected to decrease to 0.3% in 2022 and remain stable at 0.2% in 2023. 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. In 2021, the government continued implementing measures to counteract the economic crisis resulting from the pandemic, which included  the expansion of heath spending, relaxation of rules for claiming unemployment insurance, expanded assistance to the most vulnerable groups, and reduction of some tax and pension obligations. Overall, 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 remained stable at 10.4% in 2021, as the country recovered from the impacts of the pandemic. However, unemployment is expected to decrease in the coming years, reaching 9.2% in 2022 and 8.7% in 2023.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 61.93e56.5860.1163.7465.86
GDP (Constant Prices, Annual % Change) 0.4-5.9e3.13.22.7
GDP per Capita (USD) 17,601e16,023e16,96517,93118,466
General Government Balance (in % of GDP) -3.4-4.0e-3.7-3.2-2.5
General Government Gross Debt (in % of GDP) 60.568.167.568.870.0
Inflation Rate (%) 7.99.8e7.77.05.6
Unemployment Rate (% of the Labour Force) 8.910.410.49.28.7
Current Account (billions USD) 0.83-0.38-0.78-0.17-0.14
Current Account (in % of GDP) 1.3-0.7-1.3-0.3-0.2

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Uruguay’s natural resources are very limited, mainly due to country's size. There is a significant mining industry in the country, which mainly revolves around basalt, dolomite, limestone, quartz, granite and marble. There is only one gold-producing mine in Uruguay, and the country is a major producer of cement and semi-precious stones, particularly agate and amethyst. Even though only around 10% of the land is arable, agriculture is the largest export sector in Uruguay. It accounts for 7.4% of the GDP and employs 8.4% of the active population. Uruguay has rich agricultural land and almost 90% of it is devoted to livestock breeding (cattle, sheep, horses and pigs). Rice is the main crop, followed by wheat, maize, sugar cane, soybeans, and tobacco. Vegetable and fruit farming are also present throughout the country, as well as a prominent wine industry along the coast of the Rio de la Plata. Even though the Uruguayan economy was hit hard by the COVID-19 pandemic, the agricultural sector was the least affected. Still, the Uruguayan agriculture managed to recover in 2021, mainly due to the resilience of external demand and the high prices of agricultural commodities.

The industrial sector contributes to 17.9% of the country's GDP and employs 18.8% of the active population. Agriculture and animal food processing account for half of the industrial activity. Other manufacturing activities include beverages (especially wine), textiles, construction materials, chemicals, oil and coal. Additionally, Uruguay has recently invested heavily in the paper industry, which is expanding. Industrial activity in Uruguay registered a steady recovery in 2021, largely due to stronger growth in food and beverage manufacturing, as well as petroleum refining, signalling an improving trend in the industrial sector as a whole.

The services sector contributes to 63% of the GDP and employs 72.7% of the active population, mainly in finance and tourism. Particularly, the region around Punta del Este attracts a large number of visitors, which has driven the rise in building, leading to a construction boom in the area in recent years. Although the services sector was hit the hardest during the pandemic, it showed a steady recovery in 2021 as vaccination rates rose and people's mobility increased. The growth in the sector was mainly driven by commerce, transport, accommodation and food service activities, and an increase in tourism.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 8.4 18.8 72.8
Value Added (in % of GDP) 7.5 18.0 63.0
Value Added (Annual % Change) -0.3 -4.9 -6.7

Source: World Bank - Latest available data.

 

Find more information about your business sector on our service Market Reports.

 
 
Monetary Indicators 20162017201820192020
Uruguayan Peso (UYU) - Average Annual Exchange Rate For 1 MUR 0.850.830.910.991.07

Source: World Bank - Latest available data.

 
 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
69,3/100
World Rank:
44
Regional Rank:
4

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Uruguay has an open economy and foreign trade represents 46.4% of the GDP. The country mainly exports meat (18.5%), soya beans (11%), wood (9.9%), milk and cream (6.8%), and rice (6.7%). The main imports include petroleum oils (9%), electrical apparatus for line telephony (3.3%), motor vehicles (3.3%), insecticides (2.1%), and medicaments (2%). According to IMF Foreign Trade Forecasts, the volume of exports of goods and services decreased by 16.2% in 2020, while the volume of imports of goods and services decreased by 10.8%. The unprecedented fall in volume of imports and exports in 2020 was due to the global economic crisis following the outbreak of the COVID-19 pandemic.

Uruguay's main trade partners are China, Brazil, Argentina, the United States, Algeria, and Angola. The Uruguayan economy is based on industry, trade and banking services (in the capital Montevideo), as well as agriculture, livestock farming (in the centre of the country) and tourism (in the East). Uruguay is a founding member of MERCOSUR, upon which it strongly depends. The country is also a member of ALADI, a trade association that includes ten South American countries as well as Cuba, Mexico, and Panama. Under ALADI’s Economic Complementation Agreements, Uruguay enjoys and grants special preferential access to trade with Bolivia, Chile, Colombia, Cuba, Ecuador, Mexico, Peru, and Venezuela. Additionally, trade relations with Argentina and Brazil are extremely important, as those countries account for over half of Uruguay’s exports and imports, combined.

As Uruguay mainly exports agricultural products, they are highly vulnerable to international price fluctuations. In 2020, their exports of goods amounted to USD 6.8 million, while imports totalled USD 7.5 million. As for services, imports equalled USD 3.42 million, while exports reached USD 3.49 billion. As a result, the country had a trade surplus in terms of goods of USD 2.1 million and a trade surplus including services of USD 2.2 million.

 
Foreign Trade Indicators 20162017201820192020
Imports of Goods (million USD) 8,1378,4588,8938,2467,564
Exports of Goods (million USD) 7,0317,8887,4987,6806,857
Imports of Services (million USD) 2,2833,4384,4224,5963,429
Exports of Services (million USD) 3,0064,9595,3505,2063,499
Imports of Goods and Services (Annual % Change) -6.27.1-0.01.5-10.8
Exports of Goods and Services (Annual % Change) -0.24.9-1.73.6-16.2
Imports of Goods and Services (in % of GDP) 21.620.721.421.921.0
Exports of Goods and Services (in % of GDP) 27.026.126.427.825.4
Trade Balance (million USD) 2,0501,9762,2923,0702,191
Trade Balance (Including Service) (million USD) 3,0193,4603,2223,6812,267
Foreign Trade (in % of GDP) 48.646.847.849.646.4

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2020
China 20.3%
Brazil 15.4%
United States 7.7%
Argentina 4.4%
Algeria 3.1%
See More Countries 49.2%
Main Suppliers
(% of Imports)
2020
Brazil 21.1%
China 19.0%
Argentina 13.0%
United States 11.4%
Angola 2.8%
See More Countries 32.6%

Source: Comtrade, Latest Available Data

 
 

Main Products

6.9 bn USD of products exported in 2020
Meat of bovine animals, frozenMeat of bovine animals, frozen 18.5%
Soya beans, whether or not brokenSoya beans, whether or not broken 11.0%
Wood in the rough, whether or not stripped of bark...Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared (excl. rough-cut wood for walking sticks, umbrellas, tool shafts and the like; wood in the form of railway sleepers; wood cut into boards or beams, etc.) 9.9%
Milk and cream, concentrated or containing added...Milk and cream, concentrated or containing added sugar or other sweetening matter 6.8%
RiceRice 6.7%
See More Products 47.1%
7.6 bn USD of products imported in 2020
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 9.0%
Electrical apparatus for line telephony or line...Electrical apparatus for line telephony or line telegraphy, incl. line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems; videophones; parts thereof 3.3%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 3.3%
Insecticides, rodenticides, fungicides, herbicides...Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products, put up for retail sale or as preparations or articles, e.g. sulphur-treated bands, wicks and candles, and fly-papers 2.1%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.0%
See More Products 80.2%

Source: Comtrade, Latest Available Data

 
 

To go further, check out our service Import Export Flows.

 
 

Main Services

6.4 bn USD of services exported in 2018
44.04%
36.99%
7.28%
3.64%
3.04%
2.21%
1.33%
0.89%
0.53%
0.05%
3.7 bn USD of services imported in 2018
28.24%
27.72%
23.47%
7.17%
3.16%
2.48%
2.24%
2.13%
2.07%
1.29%
0.03%

Source: United Nations Statistics Division, Latest Available Data

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Political Outline

Current Political Leaders
President: Luis Lacalle Pou (since March 1st, 2020)
Vice President: Beatriz Argimón (since March 1st, 2020)
Next Election Dates
Presidential: October 27th, 2024
Chamber of Senators: October 27th, 2024
Chamber of Representatives: October 27th, 2024
Main Political Parties
Uruguay has a multi-party system with three dominant political coalitions. Outside of these coalitions, it is extremely difficult for any other political party to achieve electoral success. The dominant political forces are:

- Broad Front (FA): centre-left; maintained majority since 2009; broad coalition of 21 groups, including the Movimiento de Participación Popular (MPP), the Partido Socialista (PS), and the Vertiente Artiguista (VA)
- National Party (PN): conservative party, nationalist, liberal, also referred to as the "White Party"
- Open Cabildo (Cabildo Abierto): right-wing, populist, conservative
- Ecologist Radical Intransigent Party (PERI): centre to centre-left, green politics, liberal
- Colorado Party: centre-right, a liberal and social-democratic party, the most elected party in Uruguayan history
- Independent Party (PI): centre, a social democratic and Christian socialist party, advocates "Third Way" - an alternative to the traditional left and right-wing politics
- Popular Unity (UP): coalition of left-wing and far-left, Marxist-communist, anti-imperialist
- Party of the People (Partido de la Gente): right-wing, populist, conservative
- Green Animalist Party (PVA): centre to centre-right, green conservatism, animal rights, direct democracy
- Workers' Party (Partido de los Trabajadores): far-left, Trotskyist, socialist
- Digital Party (Partido Digital): the party advocated for e-democracy and is against being labelled either right, centre, or left.

Type of State
The Oriental Republic of Uruguay is a constitutional republic based on parliamentary democracy with strong presidential form of government.
Executive Power
The President of the Republic is is both the Head of State and the Head of Government, and is elected by universal suffrage for a five-year term. While the President may be reelected any number of times, immediate reelection is not allowed by the constitution.
Legislative Power
Parliament is bicameral. The General Assembly is made up of the Chamber of Senators, which is composed of 30 members directly elected to serve 5-year terms; and the Chamber of Representatives, composed of 99 members directly electedto serve 5-year terms.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
18/180

Source: World Press Freedom Index, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID19 disease in Uruguay, please visit the Uruguayan government platform with the official data. Official information on the progress of the epidemic in Uruguay is consolidated by the Ministry of Health. The ministry provides a daily epidemiological update, which includes key national figures.

For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures
To find out about the latest public health situation in Uruguay and the current sanitary measures in vigour, please consult the Uruguayan government platform on COVID-19 including the up-to-date information on the containment measures put in place and public health recommendations.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the portal of the Uruguayan National Customs Directorate.

For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Uruguay on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan
For the information on the economic recovery scheme put in place by the Uruguayan government to address the impact of the COVID19 pandemic on the Uruguayan economy, please visit the website of the Uruguayan Ministry of the Economy. The information on the Uruguayan economic emergency plan is available here.

For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and  macroeconomic) taken by the French government to limit the socio-economic impact of the COVID-19 pandemic,  please consult the section dedicated to France in the IMF’s Policy Tracker platform.

Support plan for businesses
For the information on the local business support scheme established by the Uruguayan government to help small and  medium-sized companies to deal with the economic impacts of the COVID19 epidemic on their activity, please consult  the portal of the National Development Agency.

For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters
To find out about the support plan for exporters put in place by the Uruguayan government, please consult the support plan for Uruguayan exporting companies available on the Uruguayan Agency for the Promotion of Investments, Exports and Country Image website.
 

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Latest Update: July 2022