KEY POINTS
- Uruguay’s GDP grew 1.2% year-on-year in Q3 2025, marking the slowest expansion since the first quarter of 2024.
- Economic output contracted by 0.2% on a seasonally adjusted quarter-on-quarter basis compared to the previous period.
- Growth was weighed down by declining grain inventories, though fixed investment and export volumes showed signs of improvement.
Uruguay’s Gross Domestic Product (GDP) registered a year-on-year expansion of 1.2% during the third quarter of 2025, marking the second consecutive period of deceleration. This growth rate represents the weakest economic performance for the country since early 2024, as the economy faced a slight contraction in quarter-on-quarter output.
The 1.2% increase follows a 2.3% growth rate recorded in the second quarter of 2025. According to a report by FocusEconomics, seasonally adjusted figures indicate that the economy contracted by 0.2% on a quarter-on-quarter basis, reversing the 0.4% expansion seen in the previous term.
The slowdown was primarily attributed to a reduction in inventories, particularly within the grain sector. While net exports provided limited support—due to strong soybean and rice shipments being offset by rising imports—domestic demand became the primary driver of growth. Fixed investment grew by 1.3%, aided by recent interest rate cuts, while lower inflation supported consumer spending despite a slight cooling in private consumption growth.
Analysts Diego Ciongo and Soledad Castagna of Itaú Unibanco noted that while the 2025 growth forecast originally stood at approximately 2.3%, there are significant downside risks following the third-quarter performance. Projections for 2026 have also been revised downward as temporary boosts, such as the agricultural recovery following the drought and the launch of the UPM pulp mill, begin to dissipate.
Strategic Market Assessment
The deceleration in Uruguay’s economic growth underscores a transition toward more moderate long-term output as post-pandemic and major infrastructure-driven tailwinds normalize. For international investors, the pick-up in fixed investment and the stability of consumer spending—bolstered by controlled inflation—suggest a resilient domestic environment despite sectoral volatility in agriculture. While the 2026 outlook appears more conservative, Uruguay’s fiscal discipline and the impact of interest rate reductions continue to support a stable climate for long-term capital commitments. This analysis is provided for informational purposes only and does not constitute formal legal or financial advice. Investors are encouraged to consult with specialized professionals regarding their specific situation.
