Recovery of agricultural exports, real wages, increased cellulose production, easing of financial conditions expected to support growth.

Uruguay’s economy is expected to grow 3.4% this year and 3% next year, the International Monetary Fund (IMF).

“The economy is expected to strongly rebound in 2024, while macroeconomic risks are broadly balanced,” the IMF said in its Staff Concluding Statement of the 2024 Article IV Mission.

The global lender said the recovery of agricultural exports, increased cellulose production, the easing of financial conditions and robust private consumption and a recovery in real wages are expected to support economic growth.

Inflation is projected to pick up in the second half of 2024 but to stay within the target range, following a gradual easing of monetary policy and robust wage growth, according to the IMF.

The Central Bank of Uruguay gradually lowered the monetary policy rate from 11.5% at the beginning of 2023 to 8.5% in April as headline inflation reverted within the target range and inflation expectations gradually declined.

“Downside risks are derived from a worsening of external financial conditions, deterioration of international geopolitical tensions and the potential for further extreme climate events,” said the statement. “Upside risks draw from events that could bring higher-than-expected agricultural export prices or lower fuel import prices.”