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 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, dairy, wine, grains, and forestry products. More than half 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 2019 with China being Uruguay’s top export destination. 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.
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% 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. Experts expect the economy to contract in 2020 due to the economic effects from the coronavirus pandemic but return to grown in 2021.
Beef is Uruguay’s main export accounting for 33% of total exports, followed by pulp (28%) and wood (8%). Uruguay’s exports increased 3% from 2018 to 2019 primarily driven by the forestry sector, specifically in pulp, wood panels and timber. According to 2019 data from Uruguay’s National Customs Directorate, Uruguay’s top export destinations for goods were (in rank order): China (31%), the EU (17%), Brazil (13%), the United States (7%) and Argentina (4%). Uruguayan exports of goods, including those from free trade zones, recorded an increase of 0.7% in 2019, totaling USD $9.15 billion. China remains the main destination of Uruguayan exports, a position which they have held since 2013. In 2019, the United States ranked fourth as a destination for Uruguay’s goods netting a total of USD $628 million.
According to the Uruguayan government, in 2019 Uruguay imported $7.20 billion in goods, a decrease of 7% from 2018. These figures do not include petroleum imports. Uruguay’s top sources of imported goods in 2019 were Brazil (19.91%), China (19.57%), Argentina (11.78%) and the United States (9.25%). The main product imports were vehicles, clothing, plastics, telephone and communication equipment, and chemicals. The country has opened to inflows of foreign direct investment from various countries over the last 15 years, reflecting greater confidence in the country’s institutional framework and economic policy.
In 2019, the United States exported $761 million in goods to Uruguay, and imported $448 million from Uruguay, resulting in a U.S. trade surplus of $313 million. The amount of goods imported from United States to Uruguay decreased for the second consecutive year, decreasing 6% between 2018 and 2019.
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 U.S.-Uruguay bilateral relationship is strong. Uruguay’s government and business sectors have a favorable view of American business.