Economy of Uruguay
The economy of Uruguay features an export-oriented agricultural sector and a well-educated workforce, along with high levels of social spending. Tourism and banking are also prominent sectors; Uruguay acts as a regional hub for international finance and tourism. The country also has a history and representation of advanced workers-rights protection, with unions and the eight-hour work-day protected at the beginning of the 20th century.
90% of the country's population is urbanized, while most of the industry and over half of the population is concentrated in the capital Montevideo.
After averaging growth of 5% annually during 1996–98, Uruguay's economy suffered a major downturn in 1999–2002, stemming largely from the spillover effects of the economic problems of its large neighbors; Argentina and Brazil. In 2001–02, Argentine citizens made massive withdrawals of dollars deposited in Uruguayan banks after bank deposits in Argentina were frozen, which led to a plunge in the Uruguayan peso, causing the 2002 Uruguay banking crisis.
History
19th century
In the 19th century, the country had similar characteristics to other Latin American countries: caudillismo, civil wars and permanent instability, foreign capitalism's control of important sectors of the economy, a high percentage of illiterate people. Among foreign investments, investors from Great Britain controlled 22% of the land and many majors parts of the industrial infrastructure, including meatpacking and leather industry, infrastructure for water and gas, and transport systems like trolley and 1100 miles of rail.In 1857, the first nationally owned bank, Banco Comercial, was founded.
Reforms after Batlle
José Batlle y Ordóñez, President from 1903 to 1907 and again from 1911 to 1915, set the pattern for Uruguay's modern political development and dominated the political scene until he died in 1929. Batlle introduced widespread political, social, and economic reforms such as a welfare program, government participation in many facets of the economy, and a new constitution.Batlle nationalized foreign-owned companies and created a modern social welfare system. Income tax for lower incomes was abolished in 1905, secondary schools established in every city, telephone network nationalized, unemployment benefits were introduced, eight-hour working day introduced, etc. By 1929, 84% of manufacturing was concentrated in a handful of industries: meatpacking, leather and wool. Industrial policies further encouraging migration from rural to urban communities, as well as waves of immigrants from southern and eastern Europe. Investment in urban infrastructure in Montevideo and a growing economy, was capped by hosting the first 1930 FIFA World Cup.
Claudio Williman who served between Batlle's two terms was his supporter and continued all his reforms, as did the next President Baltasar Brum. Around 1900 infant mortality rates in Uruguay were among the world's lowest, indicating a very healthy population.
The Great Depression ended an era of export-led economic growth in Uruguay.
Mid-20th century
The Uruguay economy shifted from an agriculture-dominated economy to an industrial economy from the period 1930 to 1955. This shift led to a sluggish economy, as Uruguay neglected its comparative advantage, diverting resources away from a productive agricultural sector to an inefficient, unproductive manufacturing sector. The government sought to bolster its manufacturing sector with import substitution industrialization, disincentivizing imports. From the 1950s onwards, the Uruguayan economy was in decline.Anthropology professor Daniel Renfrew describes the 50s, 60s and dictatorship period as economic downturn periods, followed by further economic degradation caused by neoliberalism. Economist Jamie Mezzera disagrees with this interpretation, arguing that between 1968 and 1972, Uruguay was one of the most regulated capitalist economies in the world. In this period, the government massively increased import tariffs and had near-total wage and price controls. The government instituted these policies to avoid the political pressure that would come if they were to devalue their currency. Between 1955 and 1972, economic output in Uruguay stagnated. After the price and wage controls were largely removed in 1973, growth increased by 4.3% per year until 1979.
The policies of the Colorado Party under Julio María Sanguinetti and Jorge Batlle during the 90s and early 2000s, following global trends of neo-liberalization, facilitated a shift from manufacturing and small-scale agriculture, towards increasing monoculture agriculture and services like finance and tourism. However, these policies faded as the regional economic problems in Argentina and Brazil caused a downturn and unemployment from 1998 to 2003. The economic and social crises that followed allowed for the election of the Broad Front a leftist coalition against the neoliberal policies.
Currency
Uruguay has a partially dollarized economy. almost 60% of bank loans use United States dollars, but most transactions use the Uruguayan peso. Today, the Uruguayan peso is minted in coins of 1, 2, 5, 10, and 50 pesos and in banknotes of 20, 50, 100, 200, 500, 1000, and 2000 pesos.Sectors
Agriculture, textiles and leather
Throughout Uruguay's history, their strongest exporting industries have been beef and wool. In the case of beef exports, they have been boosted since Uruguay joined the Mercosur agreement in 1991 and the country has been able trade with more distant markets, such as Japan. In 2018, it produced 589 thousand tons of beef. In the case of wool exports, they have not been doing so well in recent years suffering from other competitors in the market like New Zealand and the fluctuations of its demand during the 2008 recession in the developed world.As timber refining is being kept within the country, forestry has become a growth industry in recent years. In 2018, the country produced 1.36 million tons of rice, 1.33 million tons of soy, 816 thousand tons of maize, 637 thousand tons of barley, 440 thousand tons of wheat, 350 thousand tons of sugar cane, 106 thousand tons of orange, 104 thousand tons of grape, 90 thousand tons of rapeseed, 87 thousand tons of potato, 76 thousand tons of sorghum, 71 thousand tons of tangerine, 52 thousand tons of oats, 48 thousand tons of apple, in addition to smaller yields of other agricultural products.
Liebig Extract of Meat Company ran a very large and influential beef extract factory in Fray Bentos for 100 years.
Software
During the last decades the software industry has developed considerably. Many start-ups have been very successful, such is the case of PedidosYa and DLocal. Uruguay also exports software; the similar geographic longitude to that of the United States makes it attractive for companies to outsource software development to Uruguayan companies. Other notable Uruguayan software enterprises are: Genexus, Códigos del Sur, Overactive.Mining
Although this is a sector that does not make substantial contributions to the country's economy, in recent years there has been some activity in gold and cement production, and also in the extraction of granite.Artigas Department is well known for its amethyst and agate quartz varieties mining. During 2010s 20 thousand tons of minerals were extracted with a value of 9 million US dollars, exported to Germany, United States, Brazil and China.
Plastics
In 2011, plastics were the second-largest non-agricultural industrial export of the country.Telecommunications
Despite having poor levels of investment in the fixed-line sector, the small size of Uruguay's population has enabled them to attain one of the highest telecommunication density levels in South America. The teledensity was already the second highest in the continent in the 1990s and the highest in 2001. Reaching a peak of 162.077 in 2014, the density declined in subsequent years, yet it was still 136.921 as of 2021. Mobile penetration was the second highest in Latin America as of 2022. Furthermore, the country already achieved a 100% digitalization of main lines by 1999.The telecommunications sector is partially under a state monopoly through the public company ANTEL, including a monopoly on landline telephony. While this sector was privatized in many Latin American countries during the 1990s, Uruguay managed to keep telecommunications in public hands, partially under pressure from popular opinion through referendums. However, steps have been made to introduce liberalization and to allow for the entry of more private firms into the cellular sector. In 2022, under Luis Lacalle Pou, Uruguay authorized five cable companies into the fixed broadband internet sector.
Travel and tourism
In 2013, travel and tourism accounted for 9.4% of the country's GDP. Their tourist industry is mainly characterized for attracting visitors from neighboring countries. Currently Uruguay's major attraction is the interior, particularly located in the region around Punta del Este.Specialties
- Cattle were introduced to Uruguay before its independence by Hernando Arias de Saavedra, the Spanish Governor of Buenos Aires in 1603. Beef exports in 2006 amounted to around 37% of Uruguayan exports.
- Wool is a traditional product exported mainly to America, followed by the UK and India.
- Milk and dairy products. Conaprole, National Cooperative of Milk Producers is the main exporter of dairy products in Latin America. The area of the country dedicated to dairy food is located mainly in the southwest.
- Rice. Fine varieties are produced in the lowlands in the east of the country close to Merin lake on the Uruguay-Brazil border. The national company Saman claims to be the main exporter in Latin America. Countries it exports to include Brazil, Iran, Peru, South Africa, Chile, Senegal, Argentina, Paraguay, Bolivia, Ecuador, USA, Canada and China.
- Tourism: Several seaside resorts, like Punta del Este or Punta del Diablo in the south-eastern departments of Maldonado and Rocha, regarded as a jet-set resort in South America, are main attractions of Uruguay. International cruises call at Montevideo from October to March every year. Also, Uruguay hosts many year-round international conferences.. Montevideo is home to the headquarters of, the Common Market of the South, whose full members are Uruguay, Argentina, Brazil, Paraguay and Venezuela, associate members Bolivia, Chile, Colombia, Ecuador and Peru.
- Software and consulting. Uruguay's well-educated workforce and lower-than-international wages have put Uruguay on the IT map. A product named GeneXus, originally created in Uruguay by a company called ArTech, is noteworthy. Other important developers and consultants include De Larrobla & Asociados, Greycon and . Tata Consultancy Services has its headquarters for the Spanish speaking world in Uruguay. Many of these companies have established in .
"With a population of only three million, Uruguay has rapidly become Latin America's outsourcing hub. In partnership with one of India's largest technology consulting firms, engineers in Montevideo work while their counterparts in Mumbai sleep." - The New York Times, Sep 22, 2006.
- Banking Services. Banking has traditionally been one of the strongest service export sectors in the country. Uruguay was once dubbed "the Switzerland of America", mainly for its banking sector and stability. The largest bank in Uruguay is Banco República, or BROU, which is state-owned; another important state bank is the BHU. Almost 20 private banks, most of the branches of international banks, operate in the country. There is also a myriad of brokers and financial-services bureaus, among them Ficus Capital, Galvin Sociedad de Bolsa, Europa Sociedad de Bolsa, Darío Cukier, GBU, Hordeñana & Asociados Sociedad de Bolsa, etc. Uruguay has fully recovered from the financial crisis that caused a run on its banks.
- Public Sector: The state in Uruguay has an important role in the economy, Uruguay resisted the trend of privatization in Utilities and state-owned enterprises in the region. Several Referendums supported the state being in control of the most important utilities and energy companies. Some of the companies have a full monopoly warranted by law, others compete freely with private operators. Most of them are dominant in the local market. There is strong debate in the Uruguayan society about their role and future. Some of them contributed to the Uruguay state treasury.
- * The most important state-owned companies are: Republica AFAP, AFE, ANCAP, ANCO, Administracion Nacional de Puertos, ANTEL, BHU, BROU, BSE, OSE, UTE. These companies operate under public law, using a legal entity defined in the Uruguayan Constitution called 'Ente Autonomo'. The government also owns parts of other companies operating under private law like the National Airline Carrier PLUNA and others owned totally or partially by the CND National Development Corporation.
Data
The following table shows the main economic indicators in 1980–2021. Inflation below 10% is in green.| Year | GDP | GDP per capita | GDP | GDP per capita | GDP growth | Inflation rate | Unemployment | Government debt |
| 1980 | 14.8 | 5,050.0 | 12.2 | 4,139.9 | 6.0% | 63.5% | n/a | n/a |
| 1981 | 16.6 | 5,594.3 | 13.6 | 4,589.0 | 1.9% | 34.0% | n/a | n/a |
| 1982 | 15.9 | 5,347.4 | 11.1 | 3,727.4 | -9.4% | 19.0% | n/a | n/a |
| 1983 | 15.6 | 5,198.1 | 6.1 | 2,033.0 | -5.9% | 49.2% | 14.5% | n/a |
| 1984 | 15.9 | 5,273.5 | 5.8 | 1,920.9 | -1.5% | 55.3% | 14.0% | n/a |
| 1985 | 16.5 | 5,422.0 | 5.7 | 1,865.1 | 0.3% | 72.2% | 13.1% | n/a |
| 1986 | 18.0 | 5,912.7 | 7.0 | 2,302.5 | 7.5% | 76.4% | 10.1% | n/a |
| 1987 | 19.6 | 6,381.1 | 8.8 | 2,864.7 | 5.9% | 63.6% | 9.1% | n/a |
| 1988 | 20.4 | 6,599.9 | 9.1 | 2,946.4 | 0.5% | 62.2% | 8.6% | n/a |
| 1989 | 21.4 | 6,896.1 | 9.6 | 3,088.0 | 1.1% | 80.4% | 8.0% | n/a |
| 1990 | 22.3 | 7,136.0 | 11.2 | 3,573.1 | 0.3% | 112.5% | 8.5% | n/a |
| 1991 | 23.8 | 7,594.2 | 13.4 | 4,281.1 | 3.5% | 102.0% | 8.9% | n/a |
| 1992 | 26.3 | 8,333.4 | 15.5 | 4,890.2 | 7.9% | 68.5% | 9.0% | n/a |
| 1993 | 27.7 | 8,705.4 | 18.0 | 5,659.5 | 2.7% | 54.1% | 8.3% | n/a |
| 1994 | 30.3 | 9,449.3 | 21.0 | 6,530.0 | 7.3% | 44.7% | 9.2% | n/a |
| 1995 | 30.5 | 9,448.7 | 23.2 | 7,176.4 | -1.4% | 42.2% | 10.3% | n/a |
| 1996 | 32.8 | 10,095.7 | 24.6 | 7,580.6 | 5.6% | 28.3% | 11.9% | n/a |
| 1997 | 35.0 | 10,665.0 | 26.0 | 7,925.9 | 5.0% | 19.8% | 11.6% | n/a |
| 1998 | 37.0 | 11,183.4 | 27.6 | 8,329.1 | 4.5% | 10.8% | 10.1% | n/a |
| 1999 | 36.8 | 11,042.6 | 26.1 | 7,814.5 | -1.9% | 5.7% | 11.2% | n/a |
| 2000 | 36.9 | 11,030.1 | 24.8 | 7,406.0 | -1.9% | 4.8% | 13.4% | n/a |
| 2001 | 36.3 | 10,837.5 | 22.7 | 6,776.8 | -3.8% | 4.4% | 15.2% | n/a |
| 2002 | 34.0 | 10,170.0 | 14.8 | 4,425.1 | -7.7% | 14.0% | 16.8% | n/a |
| 2003 | 35.0 | 10,480.1 | 13.1 | 3,926.7 | 0.8% | 19.4% | 17.2% | n/a |
| 2004 | 37.7 | 11,289.8 | 14.9 | 4,456.8 | 5.0% | 9.2% | 13.3% | n/a |
| 2005 | 41.8 | 12,471.6 | 18.9 | 5,638.0 | 7.5% | 4.7% | 12.1% | n/a |
| 2006 | 44.9 | 13,360.9 | 21.3 | 6,347.3 | 4.1% | 6.4% | 10.8% | n/a |
| 2007 | 49.1 | 14,616.2 | 25.5 | 7,587.9 | 6.5% | 8.1% | 9.4% | n/a |
| 2008 | 53.6 | 15,945.2 | 33.0 | 9,808.9 | 7.2% | 7.9% | 7.9% | 46.4% |
| 2009 | 56.3 | 16,653.9 | 34.4 | 10,181.7 | 4.2% | 7.1% | 7.8% | 46.4% |
| 2010 | 61.4 | 18,069.7 | 43.8 | 12,899.7 | 7.8% | 6.7% | 7.0% | 40.8% |
| 2011 | 65.9 | 19,306.8 | 52.3 | 15,331.1 | 5.2% | 8.1% | 6.3% | 41.6% |
| 2012 | 66.8 | 19,489.1 | 55.6 | 16,213.8 | 3.5% | 8.1% | 6.3% | 49.8% |
| 2013 | 70.4 | 20,475.3 | 62.1 | 18,049.7 | 4.6% | 8.6% | 6.5% | 50.1% |
| 2014 | 74.2 | 21,491.9 | 61.9 | 17,908.8 | 3.2% | 8.9% | 6.6% | 50.8% |
| 2015 | 74.9 | 21,614.5 | 57.4 | 16,565.8 | 0.4% | 8.7% | 7.5% | 57.8% |
| 2016 | 76.9 | 22,092.5 | 57.2 | 16,448.8 | 1.7% | 9.6% | 7.9% | 55.8% |
| 2017 | 79.1 | 22,637.3 | 64.4 | 18,431.4 | 1.6% | 6.2% | 7.9% | 56.7% |
| 2018 | 81.4 | 23,204.0 | 64.3 | 18,338.8 | 0.5% | 7.6% | 8.4% | 58.3% |
| 2019 | 83.1 | 23,617.2 | 61.0 | 17,341.4 | 0.4% | 7.9% | 8.9% | 61.0% |
| 2020 | 79.0 | 22,361.7 | 53.7 | 15,208.0 | -6.1% | 9.8% | 10.4% | 68.3% |
| 2021 | 85.9 | 24,233.1 | 59.3 | 16,735.3 | 4.4% | 7.7% | 9.4% | 65.1% |
| 2022 | 96.8 | 27,232.8 | 71.2 | 20,017.6 | 5.3% | 9.1% | 7.9% | 61.2% |
| 2023 | 103.8 | 29,109.3 | 73.0 | 20,463.9 | 3.6% | 7.8% | 7.9% | 62.6% |
| 2024 | 108.9 | 30,425.7 | 74.8 | 20,919.5 | 2.7% | 6.4% | 7.9% | 63.9% |
| 2025 | 113.7 | 31,668.3 | 77.6 | 21,620.1 | 2.5% | 5.8% | 7.9% | 64.1% |
| 2026 | 118.4 | 32,882.5 | 79.6 | 22,122.0 | 2.2% | 4.5% | 7.9% | 64.9% |
| 2027 | 123.3 | 34,153.7 | 82.0 | 22,710.1 | 2.2% | 4.5% | 7.9% | 64.7% |
- Industrial production growth rate: 12.6%
- Electricity - production: 9,474 GWh
- *fossil fuel: 3.91%
- *hydro: 95.62%
- *nuclear: 0%
- *other: 0.47%
- Electricity - consumption: 6,526 GWh
- Electricity - exports: 2,363 GWh
- Electricity - imports: 78 GWh
- Agriculture - products: wheat, rice, barley, maize, sorghum; livestock; fish
- Exchange rates: Uruguayan pesos per US dollar - 24.048, 24.479, 28.704, 28.209, 21.257
Uruguay in the world
The following table shows the economic rankings of Uruguay compared to the world:| Index | Source | Rank | Published |
| Quality of Life Index | Numbeo | 42° | 2024 |
| Human Development Index | UNDP | 52° | 2022 |
| Democracy Index | Economist Intelligence Unit | 11° | 2022 |
| Global Peace Index | Vision of Humanity | 46° | 2020-2022 |
| Prosperity Index | Legatum | 37° | 2021 |
| Corruption Perceptions Index | Transparency | 14° | 2023 |
| Economic Freedom Index | Heritage | 34° | 2022 |
| Global Competitiveness Report | World Economic Forum | 54° | 2019 |
| Cost of Living Index | Expatistan | 30° | 2023 |
| Debt Rating | Moodys | BAA2 | 2021 |
| Debt Rating | S&P | BBB | 2017 |
| Debt Rating | Fitch | BBB- | 2020 |
| Developed Country Recognition | World Bank | High Income | 2023 |
| Developed Country Recognition | United Nations | Very High HDI | 2021 |
| Index of Geopolitical Gains and Losses after Energy Transition | Overland et al. | 6 out of 156 | 2019 |