Skyline at night in Uruguay

Uruguay GDP Q1 2023

Uruguay: Economy bounces back in Q1

Economic growth rebounded in the first quarter, with GDP increasing 1.2% on an annual basis (Q4 2022: -0.1% year on year).

Household spending growth fell to 2.6% in Q1, marking the weakest expansion since Q1 2021 (Q4 2022: +4.5% yoy). Government consumption slid at a quicker rate of 2.6% in Q1 (Q4 2022: -0.2% yoy). Meanwhile, fixed investment growth slowed to 2.3% in Q1 from the 3.9% expansion logged in the prior quarter.

Exports of goods and services rebounded, growing 14.0% year on year in the first quarter, which marked the best reading since Q2 2022 (Q4 2022: -5.6% yoy). In addition, imports of goods and services growth picked up to 12.1% in Q1 (Q4 2022: +3.7% yoy).

Turning to GDP by industry, the downturn in agricultural production softened, but the sector remained in the doldrums as the drought stemming from the La Niña weather phenomenon persisted. Meanwhile, manufacturing output bounced back marginally, and construction activity growth accelerated. Looking at services, trade and accommodation grew slower, while financial services picked up pace.

On a seasonally adjusted quarter-on-quarter basis, GDP also rebounded, increasing 0.9% in Q1, contrasting the previous quarter’s 1.3% contraction. Q1’s reading marked the end of a technical recession.

Available data paints a dark picture for Q2: In April, industrial production shrank, while merchandise exports plummeted. Moreover, the drought has intensified in recent months, creating concerns about basic water access and likely denting agricultural output further. Accordingly, our panelists expect the economy to contract again.

Shifting to H2, the economy should return to growth amid more favorable weather conditions and lower interest rates. The arrival and strength of the El Niño weather pattern, negotiations regarding accession to the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP) and bilateral trade talks with China are key factors to monitor.

Analysts at the EIU commented on the agricultural sector outlook:

“Looking ahead, the El Niño weather phenomenon should bring the drought to an end in the second half of this year, boosting agricultural production in the 2023/24 harvest season.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest