Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
While acknowledging that there are some challenges in Uruguay’s business climate, Uruguay is one of the more business-friendly countries in Latin America. The income distribution in Uruguay is one of the most evenly distributed in Latin America according to the World Bank’s Gini Index report, resulting in one of the largest middle classes in Latin America on a per capita basis.
Uruguay’s economic base is its agricultural sector, exporting products such as meat, cellulose, grains, dairy wood, pharmaceuticals, and plastics. More than 60 percent of Uruguay’s total exports are agricultural-based products. About half of all industrial production is dedicated to food processing or agricultural product refinement. In fact, beef was Uruguay’s number one export product in 2020 with China being Uruguay’s top export destination.
From 2003 to 2019, Uruguay experienced the longest economic expansion in the country’s history. While still positive, economic growth began to slow in 2014 and decreased to 0.5 percent in 2019 according to the Central Bank of Uruguay. This decline was driven by a decline in commodity prices as well as recessions in both Argentina and Brazil — two of Uruguay’s top trading partners. In 2020, COVID-19 threw the economy into recession for the first time in two decades. GDP fell 5.9 percent in 2020, with a strong negative impact on unemployment and poverty. The government believes the worst of the crisis is over and estimates 3.5 percent growth for 2021. Uruguayan exports of goods, including those from free trade zones, recorded a drop of 12.5 percent in 2020, totaling $8 billion. Nevertheless, these exports are expected to grow approximately 7 percent in 2021. According to the trade agency, Uruguay XXI, Uruguay´s top export destinations were China (27 percent), Brazil (15 percent), EU (14 percent), the United States (7 percent), Argentina (5 percent) and Mexico (3 percent). China remains the main destination of Uruguay´s exports, a position which they have held since 2013. In 2020, the United States ranked fourth as a destination for Uruguay´s goods for a total of $533 million. In terms of product exports, beef is Uruguay´s main export accounting for 20 percent of total exports, totaling $1.6 billion, followed by cellulose with a total of $1.1 billion. Soy and dairy are Uruguay’s third and fourth largest exports valued at $748 million and $648 million, respectively.
In 2020, Uruguay imported a total of $6.8 billion in goods (excluding petroleum), a 5 percent decrease from 2019. The main product imports were vehicles, totaling $519 million. Agricultural chemicals were second totaling $392 million. Clothing and footwear were third with a value of $344 million, followed by $318 million in plastics. Food imports were fifth, valued at $316 million and pharmaceutical products sixth, amounting to $289 million.
In 2020 Brazil was the main source of Uruguay’s imports representing nearly 20 percent of the total. China was second, with almost 19 percent. Argentina was third, with 13 percent and the United States was fourth representing 12 percent of the total, a value which decreased for the third consecutive year. In 2020, the United States exported $876 million in goods to Uruguay, and imported $533 million from Uruguay, resulting in a U.S. trade surplus of $ 343 million. Petroleum is Uruguay’s largest import from the United States represents 20 percent of the total followed by plastics, chemical inputs for agriculture and other chemical compounds.
Top reasons why U.S. companies should consider exporting to Uruguay:
- Uruguay is an institutionally stable democratic country with strong rule of law and a commitment to international agreements and norms.
- Due to its beneficial customs regimes with Mercosur and its strategic location between Argentina and Brazil, Uruguay serves as a regional distribution platform through its free trade zones.
- Due to the size of the country (3.4 million people) and the relatively high per capita GDP, Uruguay can function as a test market for those international companies that have no previous experience in the region.
- The bilateral U.S.-Uruguay relationship is strong. Uruguay’s government and business sectors have a favorable view of American business.
Uruguay is also an attractive market for international companies. It is one of the most politically and economically stable countries in the region and can serve as a regional distribution hub through its Free Trade Zones. In terms of foreign direct investment (FDI), Uruguay has received investment from various countries over the last 15 years, reflecting greater confidence in the country’s institutional framework and economic policy. For more information on FDI into Uruguay, please see the Investment Climate Statement section of this document.