Uruguay’s Economy Shows Recovery Amid Signs of Slowing Momentum
Uruguay’s Central Bank reported a 2.9% year-on-year economic growth in January 2025, based on its Monthly Economic Activity Index (IMAE). Adjusted for seasonal variations, the economy expanded by 1.2% compared to December 2024.
However, the trend-cycle component revealed a slight 0.1% contraction, indicating potential challenges ahead. This growth follows a challenging 2023 when severe drought and the Ancap refinery shutdown limited GDP growth to 0.7%.
The economy rebounded in 2024 with a 3.1% GDP increase, driven by recovery across key sectors. In the fourth quarter of 2024, year-on-year growth reached 3.5%, though quarter-on-quarter expansion slowed to just 0.3%.
Economists attribute January’s growth partly to a low base of comparison from previous months. Aldo Lema noted it reflects a predictable rebound after two months of declines.
Meanwhile, Nicolás Cichevski pointed out that the slight contraction in the trend-cycle data signals decelerating activity into early 2025. Key sectors like manufacturing showed resilience, with industrial production rising by 5.8% in December 2024 compared to the previous year.
Technology-driven industries led with a remarkable 24.6% annual growth in 2024. Consumer confidence also appeared strong, as new vehicle sales increased by 4.2% in January 2025 compared to a year earlier.
While January’s figures suggest recovery, challenges remain. Global economic uncertainties and dependence on agriculture expose Uruguay to external risks. Sustaining growth will require stable policies, investment in key sectors, and monitoring domestic demand trends.
Uruguay’s economic outlook remains cautiously optimistic but hinges on addressing structural challenges and maintaining momentum in the coming months. The IMAE will remain crucial for tracking progress and guiding policy decisions.
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