Download PDF Quick Facts Population: 3.5 million

GDP (PPP): $81.6 billion 2.1% growth 2.0% 5-year compound annual growth $23,274 per capita

Unemployment: 8.0%

Inflation (CPI): 7.6%

FDI Inflow: $-626.5 million

Uruguay’s economic freedom score is 69.1, making its economy the 47th freest in the 2020 Index. Its overall score has increased by 0.5 point due to an increase in the government integrity and property rights scores. Uruguay is ranked 5th among 32 countries in the Americas region, and its overall score is well above the regional and world averages. The Uruguayan economy has been moderately free for all but two years (when it was in the ranks of the mostly free) since the inception of the Index in 1995. GDP growth for the past five years has been moderate as well. To improve economic performance and expand economic freedom, the next government could introduce reforms to improve the business environment and boost growth, including by making the labor market more flexible and opening the banking sector. With corruption well controlled, another priority could be court reform (for example, reducing the case backlog) to improve judicial effectiveness. Read more about Uruguay Economy. Close Background Uruguay, Bolivia, and Paraguay were established in the 19th century as buffers between regional powers Brazil and Argentina. Public outrage at Marxist guerrilla violence in the 1960s facilitated a military takeover of the government in 1973. Civilian rule was restored in 1985. President Luis Lacalle of the National Party, elected in November 2019, ushered in a conservative government after 15 years of rule by the left-wing Broad Front. The once-dominant Colorado Party forms part of the Lacalle administration. Pressures on government revenue have forced cuts in programs that are popular with his political base. The economy, based on exports of commodities like milk, beef, rice, and wool, suffered in 2019 from economic recession in Argentina.

Rule of LawView Methodology

Secured interests in property and contracts are recognized and enforced. Mortgages exist, and there is a recognized and reliable system for recording such securities. The judiciary is transparent and independent, although the courts function slowly. Transparency International ranked Uruguay as having the lowest levels of perceived corruption in Latin America and the Caribbean in the 2018 edition of its Corruption Perceptions Index.

Government SizeView Methodology

The top individual income tax rate is 30 percent, and the top corporate tax rate is 25 percent. Other taxes include value-added and capital gains taxes. The overall tax burden equals 30.9 percent of total domestic income. Government spending has amounted to 33.4 percent of the country’s output (GDP) over the past three years, and budget deficits have averaged 3.3 percent of GDP. Public debt is equivalent to 70.0 percent of GDP.

Regulatory EfficiencyView Methodology

Uruguay is one of the most transparent and business-friendly nations in the Americas; political risk is low, and property rights are secure. However, labor unions have widespread influence, labor laws are rigid, and labor conflicts are frequent. Uruguay has eliminated some price controls, but the government still sets prices for electricity, fuels, rents, interdepartmental transport, medicines, natural gas, pasteurized milk, taxi fares, tolls, and water.

Open MarketsView Methodology

The total value of exports and imports of goods and services equals 40.0 percent of GDP. The average applied tariff rate is 6.3 percent, and 53 nontariff measures are in force. Foreign and domestic investors are treated equally under the law, and there are no ownership limits in most sectors. The financial sector is open, but the state remains involved through ownership and credit allocation. Capital markets are underdeveloped.