Economic growth slows in Q4

The economy loses momentum: GDP growth lost steam in Q4, falling to 3.5% year on year from Q3’s 4.4% and marking the softest reading since Q1. On a seasonally adjusted quarter-on-quarter basis, the economy expanded 0.3% in Q4, compared to the previous quarter's 0.6% expansion. This was the worst reading since Q2 2023. As a result, the economy expanded by 3.1% in 2024 as a whole (2023: +0.7%), slightly outpacing the 10-year pre-pandemic average.

Drop in exports drives economic slowdown: On the domestic front, private consumption growth accelerated to 2.7% year-on-year in the fourth quarter—bolstered by a lower unemployment rate—marking the best reading since Q3 2023 (Q3: +1.2% yoy). Moreover, government consumption grew 3.3% in Q4 (Q3: +2.9% yoy), and fixed investment growth sped up to 4.2% in Q4, following the previous quarter’s 1.3%. In terms of trade, exports of goods and services growth fell to 4.4% in Q4, marking the worst result since Q1 2024 (Q3: +9.5% yoy), whereas imports of goods and services bounced back, growing 3.8% in Q4 (Q3: -2.7% yoy).

GDP growth to cool: Following two consecutive quarters of deceleration, our panelists expect economic growth to slow further in the coming quarters. As a result, GDP growth in 2025 as a whole will ease from 2024—a year which saw the country recover from drought. That said, Uruguay’s economy is expected to outpace the Latin America growth average this year on stronger inbound tourism from neighboring Argentina, and a boost in private consumption and investment prompted by increased government spending. Economic growth in key trade partners Argentina and Brazil is a two-sided risk, while lower trade as a result of U.S. protectionist measures is a downward risk.

Panelist insight: Analysts at the EIU said: “We forecast that real GDP growth will slow to 2.5% in 2025 […]. Growth will be supported by strong inbound tourism, especially from Argentina, bolstering private consumption and the services sector. Our expectation of firm government consumption growth and increased public investment, as well as higher social spending through transfers, will also help to boost growth by propping up private consumption and investment.”

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