Uruguay’s New Government Bets On Peso Borrowing And Low Inflation To Sustain Growth
Key Points
- The government sees 2.3% growth in 2025 and 2.4% in 2026, below its earlier projection but about double the last decade’s average.
- GDP slipped 0.2% in July–September versus the prior quarter, ending eight straight quarters of gains, even as output stayed 1.2% above a year earlier.
- Inflation at 4.09% and a record peso bond deal are central to Uruguay’s claim that it can grow without losing credibility.
Uruguay’s calling card abroad is predictability. That reputation is now being stress-tested by a softer growth outlook and the harder task of lifting investment while resisting the easy temptation to spend first and ask questions later.
Economy and Finance Minister Gabriel Oddone says the economy should expand about 2.3% in 2025. He admitted it is lower than first expected, but argued it still far exceeds the last decade’s average.
For 2026, he forecast 2.4% and said the new National Budget gives the government tools to raise investment and trend growth. The data explain the caution.
In the third quarter (July–September), seasonally adjusted GDP fell 0.2% from the previous quarter, ending an eight-quarter run of expansion.
Uruguay posts modest growth, eyes fiscal stability
Output still rose 1.2% from a year earlier. For a small, open economy, that mix often signals vulnerability to external demand and global financing shifts.
Oddone points to stabilizers. Twelve-month inflation eased to 4.09% in November, near the lower end of the official target range and described by authorities as the lowest in roughly 20 years.
He also cited 15,000 jobs created over the past year. The deeper story is investor trust—and the government’s push to make it durable.
In October, Uruguay carried out what officials called its largest local-currency issuance, including the equivalent of about $1.35 billion in a new peso-denominated global bond, plus a $500 million reopening of a dollar bond.
Borrowing more in pesos is meant to reduce exposure to abrupt dollar spikes. Skeptics note a gap between the budget’s growth assumption of roughly 2.6% and estimates closer to 2.0%.
President Yamandú Orsi, a 58-year-old former Canelones governor who took office on March 1, must now show that Uruguay can keep its discipline and still grow faster than its recent record.
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