Uruguay's 2025 growth collapses to 1.8%, half official forecast, as 2026 starts "zero to zero"

The Uruguayan economy closed 2025 with growth of just 1.8% according to Banco Central data, well below the 2.6% the government itself had projected, and the new year opens with a warning few in the market dare to ignore: 2026 begins, in analysts' own words, "zero to zero." What makes this moment particularly revealing is not any single data point but the convergence of multiple signs of weakening that have accumulated over recent quarters and now paint a picture of structural fragility difficult to disguise with the official language of a "recovery path."

The quarterly pattern is telling. After modest growth of 0.8% in the first quarter of 2025, the economy contracted 0.8% in the second and 0.2% in the third, with a monthly decline of 1.1% in August versus July that put further strain on projections. The reading that emerges from these figures is not that of an expanding economy but of one that grew in 2025 almost exclusively on the statistical carryover effect from the previous year, without that momentum reflecting genuine forces of demand or investment. The Ceres Leading Index, which tracks forward-looking signals of activity, posted successive declines that reinforced the weakening signals, although more recent editions of the same indicator pointed to some incipient recovery, making it harder to read the trend with precision.

The regional context sharpens the diagnosis. Uruguay does not face this slowdown in isolation: Brazil and Argentina are also posting lackluster performance, and Senator Tabaré Viera has explicitly warned that the deceleration of the giant neighbor will have a direct impact on Uruguay, whose exports depend critically on Brazilian demand. Exposure to a deteriorating external environment, combined with warnings from the Nobel laureate in economics about the need for Uruguay to push back against the protectionism driven by the Trump administration, places the country at a crossroads of both cyclical and structural vulnerabilities.

Against this backdrop, Economy Minister Gabriel Oddone has adopted a tone that blends a defense of his management with signals of adjustment in expectations. In his interpellation before the Senate — which ended with formal backing from Frente Amplio votes — Oddone argued that "the economy is on the move" and that projection deviations are "nothing out of the ordinary." At the same time, he has publicly acknowledged that there is "a fairly high probability" of revising growth forecasts for 2026 downward, and has indicated that the inflation target could also be adjusted lower. Year-on-year inflation accelerated to 4.9% in October, complicating the price-stabilization narrative, though the figure still sits within historically contained ranges for Uruguay.

On the policy front, the Ministry of Economy and Finance has announced a package of measures aimed at stimulating private investment — which shows only hints of "modest growth" — and reducing costs and red tape to facilitate foreign trade. In parallel, the government is moving forward with the regulation of the global minimum tax in line with fiscal stability clauses, and the Banco Central has submitted a draft bill to create an open finance system. A sign of longer-term ambition is the Ministry's first step toward drafting a roadmap for OECD membership, pointing to a structural reform agenda whose time horizon extends beyond the immediate political cycle.

The dairy sector offers a bright spot amid the gray backdrop: the dairy auction on the Global Dairy Trade platform posted a 3% rise in average prices, welcome news for a sector that moves more than USD 3.1 billion annually across a network of 550 companies. The trade agreement between Mercosur and the European Union, whose entry into force has begun to be felt, is generating mixed signals among export sectors: some speak of an "incipient" impact, while others already observe "notable growth" in their shipments. The IMF, for its part, projects growth of 1.3% for Uruguay in 2026, endorsing the country's macroeconomic soundness while warning about spending pressures in health and education. Santander, meanwhile, projects a more visible rebound only in 2027, following a 2026 of weaker momentum.

What is worth watching in the coming weeks is the trajectory of the Ceres Leading Index in its upcoming editions, the behavior of private investment in response to the announced stimulus measures, and the actual impact of the Mercosur-EU agreement on export volumes. More structurally, the debate over the port tariff system — which Oddone described as "absolutely inadequate" — and the planned transformations of the AFAP regime will be axes of political and economic tension that will shape part of the business climate in the year ahead.