KEY POINTS
- Uruguay’s GDP grew 0.9% year-on-year in Q1 2026, up from 0.1% in Q4 2025.
- Private consumption and exports drove the recovery, while fixed investment contracted.
- EIU forecasts GDP growth to slow to 1.3% in 2026 due to weak confidence.
Uruguay’s economy grew 0.9% year-on-year in the first quarter of 2026, accelerating from 0.1% growth in the previous quarter, according to official data. On a seasonally adjusted quarter-on-quarter basis, GDP expanded 0.8%, up from 0.2% in Q4 2025.
As reported by FocusEconomics, the improvement was driven by stronger private consumption (up 2.9% year-on-year vs 1.9% in Q4), government consumption (2.9% vs 2.2%), and exports of goods and services (2.3% vs -1.9%). However, fixed investment contracted 3.1% (vs -0.9% in Q4), and imports grew 4.7% (vs 5.1%).
The recovery in exports reflected solid expansions in the meat and services sectors, though a severe drought weighed on agricultural output and rural household spending. Fixed investment declined due to sluggish construction activity, particularly infrastructure, and a drawdown in inventories.
Looking ahead, the Economist Intelligence Unit (EIU) projects GDP growth will slow to 1.3% in 2026 from 1.8% in 2025, citing weak consumer and business confidence weighing on private consumption and investment.
Macroeconomic Outlook for Investors
For international investors and expats, Uruguay’s moderate growth trajectory underscores its reputation for macroeconomic stability. While the Q1 rebound is positive, the slowdown forecast for the remainder of 2026 suggests cautious market conditions. The contraction in fixed investment highlights headwinds in construction and infrastructure, sectors often of interest to foreign capital. However, robust private consumption and export recovery signal underlying resilience. Uruguay’s adherence to fiscal discipline and its investment-grade status remain key attractions for long-term portfolio diversification in Latin America.
