Uruguay’s economy grew by 3.1% in 2024, recovering from a drought, but faces a likely slowdown in 2025 due to traditional modest growth rates. Key sectors like agriculture and energy showed strong performance, supported by external demand. Analysts emphasize the need for effective policies to enhance investment and productivity.
In 2024, Uruguay’s economy experienced a 3.1% growth, recovering from the adverse impacts of a severe drought in the previous year. This information was provided by the Central Bank of Uruguay (BCU), highlighting a year-on-year GDP increase of 3.5% and a quarterly rise of 0.3%. The growth was primarily fueled by enhanced agricultural yields, robust hydropower generation, increased trade activity, and higher pulp production, although a decline in construction impacted overall gains.
Economic analysts express a cautious optimism regarding the recovery, emphasizing that the current growth rates do not signify a sustained acceleration. Economist José Antonio Licandro stated, “These are good numbers, but Uruguay is not taking off—it’s recovering.” He predicts that growth for 2025 will align with the nation’s historical trend of modest expansion, anticipated to be between 2% and 2.5%.
The agriculture, energy, and manufacturing sectors showed the most promise, with energy output rising by 19.6% and agriculture by 11.3%. External demand significantly contributed to growth, particularly with exports increasing by 8.3%. However, challenges remain, including weak household consumption and a decline in fixed investment, as noted by Marcelo Sibille of KPMG, who mentioned that household consumption experienced only minor growth in 2024.
As attention shifts to the upcoming year, economists forecast that domestic consumption and investment will increasingly drive economic growth. Sibille remarked on the necessity for policies that promote investment and productivity to address the current challenges: “The challenge now is to create conditions for faster income growth.” Moreover, key policy decisions regarding interest rates, wage negotiations, and the national budget will be crucial in shaping the economic landscape.
With a per capita GDP estimated at $23,500 and total GDP around $81 billion, Uruguay remains relatively steady compared to other regional economies. Nevertheless, ongoing discourse raises concerns about whether the nation can transcend its historically modest growth ceiling, as highlighted by the analysis from El País.
In summary, Uruguay’s economy is on the mend with a 3.1% growth rate in 2024, thank to improved agricultural performance and external demand. Economists suggest a slowdown is imminent in 2025 due to anticipated reductions in household consumption and investment. The importance of strategic policy decisions in fostering economic growth cannot be overstated, as Uruguay aims to break free from its historical growth limitations.
Original Source: en.mercopress.com
