MercoPress. South Atlantic News Agency

Uruguay’s economy rebounded in 2024, but growth expected to slow in 2025

The agriculture, energy, and manufacturing sectors saw the strongest performance, with energy growing by 19.6% and agriculture by 11.3%.

Uruguay’s economy expanded by 3.1% in 2024, recovering from a severe drought the previous year, according to national accounts data released by the Central Bank of Uruguay (BCU). However, economists warn that growth in 2025 is likely to return to the country's historical pace of slower expansion.

In the final quarter of 2024, GDP grew by 3.5% year-on-year, and 0.3% in seasonally adjusted terms compared to the previous quarter. The rebound was driven by better agricultural yields, strong hydropower generation, rising trade activity, and increased pulp production. These gains were partially offset by a decline in construction, due mainly to the completion of a major railway project.

Analysts note that while the figures are encouraging, they reflect a recovery rather than a take-off. “These are good numbers, but Uruguay is not taking off—it’s recovering,” said economist José Antonio Licandro in remarks to El País. He added that 2025 growth will be “solid, but at our own pace,” referring to Uruguay’s traditionally modest growth rates.

The agriculture, energy, and manufacturing sectors saw the strongest performance, with energy growing by 19.6% and agriculture by 11.3%. On the demand side, growth was fueled mainly by external demand, particularly an 8.3% rise in exports.

Looking ahead, economists anticipate a slowdown in 2025, with projections ranging between 2% and 2.5%. “Without one-off effects like the drought rebound, we expect a more moderate pace,” said Luciano Magnífico of Exante.

Some economists also raised concerns about weak household consumption and declining investment. According to Marcelo Sibille of KPMG, household consumption grew only modestly in 2024, while fixed investment fell despite a slight rebound in the second half of the year.

The BCU's updated data also revised previous years’ figures: GDP growth for 2023 was adjusted from 0.4% to 0.7%, while 2022 was revised down from 4.7% to 4.5%.

In 2025, domestic consumption and investment are expected to play a more critical role in driving growth, especially as external conditions may become less favorable. “The challenge now is to create conditions for faster income growth,” Sibille told El País, pointing to the need for policies that stimulate both investment and productivity.

Economists also highlighted the importance of upcoming policy decisions, including interest rates, wage negotiations, and the October national budget, in shaping Uruguay’s economic trajectory.

With a per capita GDP estimated at $23,500 and total GDP around $81 billion, Uruguay continues to perform steadily by regional standards—but, as El País notes, the question remains whether the country can move beyond its historically modest growth ceiling.