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Uruguay stands out in Latin America for being an egalitarian society, for its high per capita income, and for its low levels of poverty and inequality. In relative terms, its middle class is the largest in the LAC region and represents more than 60 percent of its population.

Following the 2002 crisis, sound macroeconomic management and favorable external conditions supported a prolonged period of economic expansion. However, growth has slowed since 2015, amid normalizing commodity prices, the health crisis triggered by the COVID-19 pandemic, and climate shocks such as the severe drought that hit the country between October 2022 and August 2023. Despite the unfavorable context, Uruguay has maintained prudent fiscal management anchored in the fiscal rule and has the lowest sovereign spreads in the region. 

In 2023, the economy grew by 0.4 percent, largely reflecting the drought-induced decline in agricultural production. Economic growth is expected to recover to 3.2 percent in 2024, driven by exports and private consumption, and supported by improvements in the labor market and inflation rates within the Central Bank of Uruguay’s target range.  

Despite its economic and social stability, structural limitations hinder the country’s ability to bridge significant disparities. While only an estimated 6 percent of the population is considered poor under the international poverty line of $6.85 per person per day (2017 PPP), the rate is twice as high among children, adolescents, and the Afro-descendant population. Income inequality has not narrowed in recent years, with the Gini Index remaining at about 40 points. Although this is one of the lowest levels in Latin America, it remains high compared to other countries outside the region.  

Comparatively low education outcomes given the country’s income level, weak global integration, and exposure to climate shocks are some of the most relevant challenges facing the country.

Uruguay has been a pioneer in the development of financial instruments to address climate change. One key example is the recent approval of the first-ever loan linking the financing conditions of a World Bank loan with the achievement of ambitious environmental targets. This mechanism could lead to a reduction of up to US$12.5 million in interest payments over the life of the loan if Uruguay achieves a verifiable decrease in the intensity of methane gas emissions from livestock production. 

Last Updated: Apr 03, 2024


Uruguay: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

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Country Office Contacts

URUGUAY +5982 905-2300
Victoria Plaza Office Tower – Plaza Independencia 759, 14 floor - Montevideo