Uruguay Economic Outlook. June 2024

After a weak GDP growth of 0.4% in 2023, activity will grow 3.2% in 2024 due to the recovery of the agricultural sector, hydroelectric power generation and private consumption. Even so, reforms are needed to gain competitiveness and maintain a sustainable growth path.

Key points

• Key points:
• The global growth will moderate for the rest of the year and is expected to recover somewhat in 2025. The Fed will wait longer than anticipated to begin its easing cycle: demand will likely weaken, promoting disinflation and rate cuts.
• After complying with the fiscal rule for the fourth consecutive year in 2023, it will be more difficult to do so in 2024 as long as the expenditures that are growing above the ceiling stipulated by the rule are not channeled. The Government revised the expected deficit to 3% of GDP for the Central Government and the Social Security Bank.
• The exchange rate will reach UYU/USD 40 in December. The strength of the peso has solid fundamentals, although it is also driven by the attractive yield of local currency assets. We do not expect a major correction in real terms over the next two years.
• Inflation will end this year at 5.5% and at 5.0% next year. The Central Bank maintains its commitment against price increases and the market accompanies monetary policy decisions.

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