MercoPress. South Atlantic News Agency

Uruguay's population projected to decline over time

A smaller population could decrease housing demand in major cities like Montevideo

A study released this week by Uruguay's National Institute of Statistics (INE) showed that the South American country's population will have dwindled by nearly half a million people by 2070, falling from approximately 3.49 million to 3 million, due primarily to a low birth rate, an aging population, and a net loss to emigration.

The fertility rate in 2023 was 1.28 children per woman, well below the 2.1 needed to maintain a stable population. This is attributed to social and cultural shifts, such as increased female participation in the workforce and smaller family preferences.

By 2070, the percentage of the population over 65 is expected to more than double, reaching 32.5%. This will strain social security and healthcare systems as the working-age population shrinks and the number of retirees increases.

A negative net migration of around 1,783 people per year—as citizens leave for better opportunities in countries like Argentina, Brazil, and those in Europe—further contributes to the population decrease.

This demographic shift is expected to have significant consequences for Uruguay. A smaller population could decrease housing demand in major cities like Montevideo, potentially lowering real estate prices. However, other areas may see price increases due to population growth.

The aging population will likely lead to higher public spending on health and pensions, which could result in increased taxes and a higher cost of living.

This scenario could lead to greater tax burdens or require a reallocation of resources, potentially affecting living costs and general welfare. At the same time, the labor market is likely to undergo substantial shifts. Shortages in key industries combined with a shrinking working-age population may drive wages higher as employers compete for workers, increasing production expenses and raising consumer prices.

Labor-intensive sectors—such as agriculture, construction, and various services—could see noticeable price hikes in goods and outputs. Additionally, the INE also projected that a growing reliance on foreign labor and imported inputs may push policymakers to introduce targeted immigration strategies aimed at attracting skilled professionals and addressing workforce gaps.