Uruguay Growth Forecast Cut to 1.3% by the IMF, Below the Government’s 1.6%
URUGUAY · ECONOMY
Key Facts
- —The country Uruguay, a farm-exporting nation of about 3.5 million people between Brazil and Argentina, is known for stable institutions.
- —Why it matters Drought has hurt farms since 2025; central bank data show output fell 0.5% year on year in April–June.
- —What happened On 24 September the IMF cut its 2026 growth forecast for Uruguay to 1.3%, from 1.8% in April.
- —The minister’s view Economy Minister Gabriel Oddone called the cut an “appropriate reading” on 28 September; the official forecast remains 1.6%.
- —What it means for you Inflation was 4.55% in August, near target; weaker growth could force spending restraint, the fiscal council warns.
- —Still open Whether the government lowers its 1.6% forecast, and whether an El Niño season hurts the next harvest.
The International Monetary Fund has cut its Uruguay growth forecast for 2026 to 1.3%, mainly because of a drought. Economy Minister Gabriel Oddone called the cut an “appropriate reading” of the economy on Monday 28 September, Subrayado reported.
The IMF figure sits below the government’s own forecast of 1.6%, which private analysts call too optimistic. The gap matters because the budget’s revenue estimates are built on the official number, a point the opposition keeps pressing.
What the IMF said and why
An IMF team led by Raphael Espinoza visited Montevideo from 14 to 24 September. It carried out the Article IV consultation, the regular health check the Fund runs in each member country.
Its closing statement, published on Thursday 24 September, forecasts growth of 1.3% in 2026 and 2.4% in 2027. Uruguay’s Economy Ministry summarised it the same day and linked to the full text.
The IMF blamed the drought, which has hurt farm output since the third quarter of 2025. It said the rest of the economy is “growing around its potential”, meaning at its normal long-run pace.
Household spending has kept activity going, helped by rising real wages, lower inflation and a stronger peso, Montevideo Portal reported. Unemployment is at historically low levels and informal work is falling, the Fund said.
A forecast cut in two steps
In 2025 the IMF had expected 2.4% growth for 2026, Montevideo Portal noted. On 14 April its World Economic Outlook, published twice a year, cut that by six tenths to 1.8%, Ámbito reported.
The new Uruguay growth forecast of 1.3% is therefore the second cut this year. It matches the 1.3% expected by the Committee of Experts, a body set up under Uruguay’s fiscal rule, Búsqueda reported.
For 2027 the IMF is more hopeful than the government. It expects 2.4%, against the ministry’s 2.1% and the expert committee’s 1.7%, according to figures reported by Búsqueda.
What the latest figures show
Central bank figures released on Tuesday 15 September showed output 0.5% lower in April–June than a year earlier. Against the first quarter it fell 0.8%, after adjusting for seasonal swings, Teledoce reported.
Farming, fishing and mining shrank 22.2% on the year after a poor soy harvest, la diaria reported. Without farming, the economy grew 1.4%, Oddone told reporters the next day.
Investment rose 9.5% on the year, helped by a Google data centre, forestry projects and power lines, El País reported. It was the first rise after four quarters of decline.
The longer record is modest. The economy grew 1.8% in 2025, while the ministry had expected 2.6%, El País noted.
What the minister said
Oddone serves in the centre-left Broad Front government of President Yamandú Orsi, now in its second year. The IMF said that government still stresses macroeconomic stability and inclusive growth.
Oddone spoke after a conference with Mathias Cormann, head of the OECD, the Paris-based club of mostly rich economies. “We view it very favourably,” he said of the IMF report, El País reported.
He praised the Fund’s view of how Uruguay absorbed a climate shock and an oil-price shock. He added that growth, leaving the drought aside, is running “above 1.3%”.
Despite the downgrade, he called it “an appropriate reading of what we in the economic team are seeing”, El País reported. He called the Fund’s reading “rigorous” and said it helps ground public debate in evidence, Telenoche reported.
Oddone also noted that Uruguay has had no IMF loan programme for more than 20 years. It receives two IMF visits a year and one annual report, he said.
The official forecast and the opposition
The government’s forecast of 1.6% was set in the Rendición de Cuentas, its mid-year budget update. It was cut from 2.2% in the five-year budget passed in 2025, El País and Búsqueda reported.
Oddone reaffirmed the 1.6% on Wednesday 16 September, the day he appeared before a Senate committee, La Mañana reported. He called it “absolutely realistic” and said the ministry expects about 2.8% growth in the second half, Montevideo Portal reported.
Opposition senator Pedro Bordaberry of the centre-right Colorado Party said on 16 September that the minister should correct the number, Teledoce reported. “Those who want to invest in Uruguay above all need certainty,” he said.
Bordaberry also warned that public debt is “approaching 65%” of GDP, a level he called a red zone. The IMF expects the ratio of public debt to GDP to stay broadly stable over the medium term, the Economy Ministry said.
What independent economists expect
Private forecasters are gloomier than both the IMF and the government. The median forecast in the central bank’s September survey of analysts is 1%, down from 1.2%, La Mañana reported.
The Autonomous Fiscal Council, an independent adviser to the ministry, told senators on 9 September that the official forecast looked too high. If growth falls short, it said, spending restraint should keep the deficit goal on track, Búsqueda reported.
Reaching 1.6% would need 3.2% growth over the last two quarters, economist José Antonio Licandro told El País. He called that “implausible”, while Agustín Iturralde of the Centre for Development Studies, a private think tank, forecast 0.9%.
Gabriela Mordecki of the University of the Republic, Uruguay’s public university, told El País that construction, trade and investment improved. Still, she said, “no policy can reverse a lack of rain.”
What it means for residents and investors
Consumer prices rose 4.55% in the 12 months to August, just above the central bank’s 4.5% target, Ámbito reported. That is still inside the bank’s 3–6% tolerance range, so residents face slower growth without a price shock.
The central bank has kept its policy rate, the benchmark for borrowing costs, at 5.75% since a cut on 3 March. The IMF statement expects a gradual rise to a neutral level, one that neither speeds up nor slows the economy.
Unemployment rose slightly to 7.2% in August from 7.0% in July, according to the statistics institute INE. The peso traded at about 40.3 per US dollar on Monday, down about 3% this year, El País reported.
The extra yield Uruguay pays over US Treasury bonds is the region’s lowest, near historic lows, la diaria reported. Oddone said on Monday that a recent US rate rise has no short-term effect on Uruguay’s borrowing plans.
What comes next
The next test is the third-quarter output figure and whether the ministry changes its 1.6%. Oddone has said he would correct both spending and the forecast if growth clearly fell short, La Mañana reported.
The IMF named tighter global finance, oil shocks and weather, including a possible El Niño, as the main risks. Its reference goal is a primary surplus, income above spending before interest, of 0.5% of GDP in 2029, El Observador reported.
The cut does not signal a crisis, and it is not tied to any IMF loan. The Fund sees the non-farm economy growing at its normal pace and expects 2.4% growth next year.
What is not known is whether the minister will lower his forecast, or where any spending restraint would fall. Bordaberry said the ministry has not yet explained where it would hold back spending.
Frequently Asked Questions
What is an IMF Article IV review?
It is the regular check the IMF runs in every member country. Staff visit, meet officials, business groups and unions, then publish a closing statement. It is not a loan.
Why did the IMF cut its Uruguay growth forecast?
Mainly because a drought hit farm output, especially soy, from the third quarter of 2025. The IMF said the rest of the economy is growing around its normal pace.
Does Uruguay have an IMF loan programme?
No. Economy Minister Gabriel Oddone said Uruguay has had no IMF financial programme for more than 20 years. The Fund visits twice a year and reports once a year.
How fast is Uruguay’s economy growing?
It grew 1.8% in 2025 and shrank 0.5% year on year in April–June 2026. For 2026 the IMF expects 1.3%, the government 1.6% and private analysts about 1%.
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