MercoPress. South Atlantic News Agency

FMI foresees rebound in Uruguay's economy

According to the IMF, “continued vigilance of monetary policy is crucial”

The Washington-based International Monetary Fund (IMF) released a report this week forecasting a “strong rebound” in Uruguay's economy this year. Driven by a surge in agricultural exports amid “balanced” macroeconomic risks, a 3.7% growth has been projected.

The IMF also foresees an increase in cellulose production by UPM and the recovery of real wages. In addition to this year's figures, the credit agency envisions a 2.9% improvement for 2025.

After the agricultural reactivation following a historic drought in 2022 and 2023, the IMF highlighted the easing of financial conditions in the South American country, as well as robust private consumption stemming from a salary update, coupled with a reduction in the price gap of products given the reduction of the currency exchange in neighboring Argentina.

The IMF admitted that Uruguay went through “the worst drought in the last century” in October 2022 and April 2023, which caused significant losses and affected agricultural production.

Uruguay's inflation is also expected to grow in the second semester of 2024 amid a gradual easing of rates by the Central Bank (BCU) in addition to wage growth. Still, the overall results are not expected to pierce the government's target. According to the IMF, “continued vigilance of monetary policy is crucial to continue to build credibility and support de-dollarization efforts.”

All these forecasts were released as President Luis Lacalle Pou sails through his last year in office. The Uruguayan Constitution does not allow back-to-back terms. In this scenario, the country is going through several scandals as politicians vie to succeed the Multicolor leader.