Montevideo, founded by the Spanish in 1726 as a military stronghold, soon took advantage of its natural harbor to become an important commercial center. Claimed by Argentina but annexed by Brazil in 1821, Uruguay declared its independence four years later and secured its freedom in 1828 after a three-year struggle. The administrations of President Jose BATLLE in the early 20th century launched widespread political, social, and economic reforms that established a statist tradition. A violent Marxist urban guerrilla movement named the Tupamaros, launched in the late 1960s, led Uruguay's president to cede control of the government to the military in 1973. By yearend, the rebels had been crushed, but the military continued to expand its hold over the government. Civilian rule was restored in 1985. In 2004, the left-of-center Frente Amplio Coalition won national elections that effectively ended 170 years of political control previously held by the Colorado and National (Blanco) parties. Uruguay's political and labor conditions are among the freest on the continent.
Southern South America, bordering the South Atlantic Ocean, between Argentina and Brazil
arable land, hydropower, minor minerals, fish
Population - distribution
most of the country's population resides in the southern half of the country; approximately 80% of the populace is urban, living in towns or cities; nearly half of the population lives in and around the capital of Montevideo
Spanish (official), Portunol, Brazilero (Portuguese-Spanish mix on the Brazilian frontier)
MONTEVIDEO (capital) 1.707 million (2015)
- Conventional long form
- Oriental Republic of Uruguay
- Conventional short form
- Local long form
- Republica Oriental del Uruguay
- Local short form
- Geographic coordinates
- 34 51 S, 56 10 W
- Time difference
- UTC-3 (2 hours ahead of Washington, DC, during Standard Time)
accepts compulsory ICJ jurisdiction; accepts ICCt jurisdiction
Uruguay has a free market economy characterized by an export-oriented agricultural sector, a well-educated workforce, and high levels of social spending. Uruguay has sought to expand trade within the Common Market of the South (Mercosur) and with non-Mercosur members, and President VAZQUEZ has maintained his predecessor’s mix of pro-market policies and a strong social safety net.
- External debt stocks
- US$ 14,349,584,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -1,119,275,176
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 10,575,611,356
- Exports of goods and services
- US$ 11,192,990,714
- Total Merchandise Trade
- FDI, net inflows
- US$ 1,369,314,228
- Commercial Service Exports
- US$ 3,083,554,881
Cellulose, beef, soybeans, rice, wheat; dairy products; fish; lumber, tobacco, wine
food processing, electrical machinery, transportation equipment, petroleum products, textiles, chemicals, beverages
- beef, soybeans, cellulose, rice, wheat, wood, dairy products, wool
- China 15%, Brazil 14.4%, US 6.5%, Argentina 4.8% (2015)
- refined oil, crude oil, passenger and other transportation vehicles, vehicle parts, cellular phones
- Brazil 18.4%, China 17.5%, Argentina 12%, US 9.2%, Germany 4.5%, Nigeria 4.1% (2015)
- Country Risk Rating
- A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behavior. Corporate default probability is still acceptable on average.
- Business Climate Rating
- The business environment is acceptable. Corporate financial information is sometimes neither readily available nor sufficiently reliable. Debt collection is not always efficient and the institutional framework has shortcomings. Intercompany transactions may thus run into appreciable difficulties in the acceptable but occasionally unstable environments rated A4.
- Abundant agricultural and forestry resources
- Social homogeneity and political stability
- Active reform policy (business climate, public finances, social security)
- Sizable foreign direct investment
- Member of Mercosur, favored trading relations with the EU and the United States
- Economy vulnerable to external shocks
- Inadequate transport infrastructure
- Dependence on economic cycles in Argentina, Brazil, and China
- Public debt level
- Competitiveness being reduced by inflation
In 2016, Uruguayan growth remained close to stagnation, hit by weak regional demand, mainly from Brazil and Argentina, and by low commodity prices (cereals and, in particular, soybeans). In 2017, activity is expected to pick up but will remain modest. Internally, activity is likely to be buoyed by increased investment in connection with the infrastructure program initiated by the government in the form of private/public partnerships. This program benefits from financial support from the IDB (Inter-American Development Bank), which released a credit facility for USD 300 million in late 2016. In principle, this facility will be used to partly finance the companies investing in projects to improve the roads, modernize the railway and expand and dredge the Port of Montevideo. Household consumption is also expected to maintain a degree of momentum due to the expected decline in inflation, which will, nonetheless, remain below the target range (3%-7%) fixed by the central bank, fueled mainly by the indexation of wages. Externally, the economic recovery in Brazil, the country's main customer for exports of goods and services, and in Argentina, the principal source of FDIs, is expected to sustain growth.
In 2016, the Uruguay's economic slowdown affected the government's fiscal consolidation plans included in the five-year finance act passed in December 2015. The government was counting mainly on increased tax collection driven by the dynamism of household consumption and the recovery of exports, which in the end did not take place. In order to limit the increase in the deficit and the public debt, the government is now counting on a more restrictive fiscal policy in 2017. It is thus relying on cuts to current spending associated with the functioning of the public administration and specifically on not filling vacancies and abolishing early retirement plans and overtime. The government has fixed itself a public deficit target of around 2% to 2.5% by the end of the presidential term in 2019. With regard to monetary policy, this is expected to remain focused on inflation targeting through the reduction in money supply rather than through raising key rates.
In 2016, the current account deficit improved thanks, in particular, to the drop in imports fostered by weak energy prices, specifically those of oil, and weak domestic demand. Exports also declined, affected by relatively weak prices for raw or semi-processed agricultural products (soybeans, meat and dairy products), as well as by lower demand from the main trading partners (China, Brazil and Argentina). In 2017, external trade is expected to benefit from increased demand from Brazil (main customer) and from Argentina thanks to the expected economic recovery in both countries. Imports are expected to benefit again from relatively low energy prices, but the expected increase in investment is likely to generate a rebound in imports (especially of capital goods). The balance of services is likely to benefit from a rise, even though modest, in the number of Argentinian tourists while the income balance will still be hit by profit repatriation and interest paid on the public debt.
President Tabaré Vázquez is having to deal with a decline in his popularity and the divisions which have arisen within the ruling coalition, Frente Amplio (FA), between those who support the maintenance of high social spending and those leaning towards a more restrictive fiscal policy. The regional economic slowdown effectively puts a brake on the increase in government income, threatening plans to reduce the budget deficit and the public debt, as well as the rise in spending (on education and health, in particular) promised by the government. The president meanwhile is faced with growing insecurity and allegations of corruption, under the previous administration, which will implicate some members of the FA. However, the country's political stability does not appear to be under threat. Meanwhile, Uruguay remains one of the preferred locations for FDIs in South America.
With regard to external politics, in October 2016 Uruguay and Chile signed a new free-trade agreement aimed at deepening the existing trade links between the two countries. Uruguay thus hopes to benefit from the network of free-trade agreements enjoyed by Chile in the region. The country is expected, moreover, to continue to seek support from Brazil and Argentina for progress to be made in the negotiations for a free-trade agreement between Mercosur and the European Union.