Uruguay's economy rebounded strongly in 2024, growing at 3.1%, driven by agricultural exports recovering from a severe drought and growing tourism. The output gap nearly closed, unemployment rates ticked down, and inflation fell to 4.2% in August 2025, below the central bank target. However, the fiscal deficit increased to 3.2% of GDP, necessitating the activation of the fiscal rule's escape clause.
The IMF expects real GDP growth to moderate to 2.5% in 2025, driven by domestic demand and exports, with inflation projected to converge around the central bank target of 4.5%. Macroeconomic risks are broadly balanced, with the economy sensitive to commodity price movements, global financial conditions, and regional developments. Upside risks include strong agricultural harvests, favorable commodity prices, and opportunities to access new markets.
The IMF welcomes the authorities' commitment to prudent fiscal policy and their five-year budget plan to reduce the deficit and stabilize debt in the medium term. It also welcomes the proposed enhancements to the fiscal rule and the fiscal council, which are in line with previous IMF recommendations. The monetary policy stance has been appropriately tight, bringing inflation and inflation expectations to the target. The IMF recommends further efforts to put debt on a downward path and encourages structural reforms to revitalize growth and boost productivity. These reforms include enhancing educational outcomes, bolstering human capital, leveraging Uruguay's AI readiness, improving competitiveness, and encouraging labor force participation and facilitating the integration of migrants.
