Uruguay's growth forecast collapses as fiscal watchdog challenges official projections
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Uruguay's economy enters the third quarter of 2026 caught in a contradiction its own authorities can no longer disguise: the country is growing, but not enough, and both international organizations and the state's independent technical body agree that official projections overstate what lies ahead.
The most relevant data point drawing attention today is the accumulation of downward revisions to growth prospects for 2026. Private analysts have once again trimmed their estimates, according to El Observador, in a move that reflects not only the weakness of the second half of 2025 but also the absence of domestic catalysts capable of accelerating activity. Consultancy CPA Ferrere, one of the most respected in the local market, projects the economy will grow just 1% this year, well below the government's target. Economy Minister Gabriel Oddone himself acknowledged before parliament that there is "a fairly high probability" of revising the projected growth downward — an admission that, coming from the head of the MEF, carries more weight than any private forecast.
Adding to this is a first-order institutional warning. The Consejo Fiscal Autónomo alerted Parliament about an "overestimation" of the macroeconomic projections included by the Ministry of Economy in the Rendición de Cuentas. The body, created precisely to offer an independent reading of public finances, did not challenge the direction of fiscal policy but rather the credibility of the assumptions on which it rests. In a country that has built its international reputation on the strength of its accounts and the reliability of its institutions, such questioning is no small matter.
The macroeconomic backdrop offers little help. The economy contracted 0.8% in the second quarter of last year, hit by the drought that devastated the agricultural sector, and posted a 0.2% contraction in the third quarter. The first-quarter 2026 rebound of just 0.8% versus the fourth quarter of 2025 provided momentary relief but did not resolve the underlying problem: according to El Observador, the economy grew in 2025 almost exclusively on "statistical carryover" from previous quarters, and 2026 began, in the words of local analysts, "zero to zero." The leading activity index from the Centro de Estudios de la Realidad Económica y Social (Ceres) reflects that ambiguity: it advanced 0.3% in May, marking two consecutive months of growth, but a subsequent reading showed a fresh decline that "reinforces signs of weakening."
Fitch Ratings decided to maintain Uruguay's investment grade, positive news in terms of access to international financing, but the agency did not hold back its warnings: low growth and rising public debt are the two risk factors it explicitly flagged. The data is consistent with what was recorded at the close of the 2024 fiscal year, when the fiscal deficit stood at levels similar to those of 2019 and public debt accumulated an increase of more than ten percentage points of GDP over the recent period. The International Monetary Fund projects 1.3% growth for 2026 and recommends deepening fiscal adjustment, while acknowledging the country's macroeconomic resilience in the face of external shocks.
The tension between stability and dynamism sits at the core of Uruguay's economic debate. Experts consulted by El Observador warn that political peace and macroeconomic stability, genuine assets of the country, are a necessary but not sufficient condition for breaking out of stagnation. Uruguay, according to economists cited by Crónicas and other outlets, is an expensive country that grows little, with competitiveness problems that persist regardless of the political cycle. A weak dollar has once again put pressure on the export sector: the president of the Asociación Rural del Uruguay (ARU) warned that the situation is "at the limit," and the MEF took measures to mitigate the impact of the greenback's decline on competitiveness. The reduction of the IMESI discount on fuel along the border with Argentina, announced by the government, is another sign that the relative cheapening of the neighboring country is pressing on Uruguay's cost structure.
On the trade policy front, the Ministry of Economy announced measures to reduce costs and paperwork tied to foreign trade, and Minister Oddone will embark on a tour of the United Kingdom to strengthen economic and financial ties. On the regulatory front, the Banco Central presented a draft bill to create an open finance system, and the government is advancing the regulation of the global minimum tax, slated for the budget law, with estimated revenue of USD 350 million per year.
What to watch in the coming weeks is the evolution of the Ceres index for July and August, which will confirm or refute whether the first-quarter momentum carried through. The parliamentary discussion of the Rendición de Cuentas, already under consideration in the Senate, will determine whether the government can sustain its fiscal targets in a context where its own oversight body is questioning them. And the formal revision of growth projections by the MEF, which Oddone has already flagged as likely, will be the litmus test for the credibility of the economic team in a year when Uruguay needs to prove that stability can, at last, translate into expansion.