URUGUAY – Activity contracted sequentially in 3Q25

GDP rose by 1.2% yoy in 3Q25, down from 2.3% in 2Q25. At the margin, using the central bank's seasonally adjusted series, GDP fell by 0.2% qoq/sa in 3Q25, after eight consecutive quarters of sequential expansion. Furthermore, the BCU adjusted past data, especially in 1Q25, with GDP rising sequentially 0.60% qoq/sa, somewhat below the previous estimate (0.68%). Thus, the statistical carryover for 2025 stands at 1.9%.

Mixed signals across the sectors. On the supply side, the annual print was mainly driven by the Trade, Accommodation and Food & Beverage Supply, which expanded by 5.4% YoY in 3Q25 with an incidence of 0.7 p.p, due to the growth of wholesale and retail trade services, linked to the greater commercialization of soybeans, imported fuels and higher sales of imported consumer goods, mainly meat, pharmaceuticals and textiles, meanwhile accommodation services and the supply of food and beverages presented a negative performance, explained by the lower demand of non-resident tourists, partially offset by a growth in domestic demand. Moreover, Health, Education, Real Estate and Other Services expanded by 0.8% YoY in 3Q25 with an incidence of 0.2 p.p due to greater production of recreational activities and, to a less extent, the increase in health and education services. On the other hand, the manufacturing sector fell 2.1% yoy (incidence of -0.2 pp) due to the negative performance of oil refining activity, which remained paralyzed for approximately half of the period, cause of the breakdown of José Ignacio's oil buoy. Other activities that had a negative impact, although to a lesser extent, were the production of cellulose pulp and the manufacture of motor vehicles. Additionally, construction fell by 3.1% (incidence of -0.1 pp), driven by the lower investment in other constructions in road works and lines of electrical energy.

Domestic demand increased in 3Q25. Domestic demand rose by 0.4% yoy in 3Q25 (2.2% in 2Q25). This increase was led by a 1.9% YoY rise in consumption, driven by private expenditures (2.1% YoY), and an increase of 1.4% in public expenditures. On the other hand, gross capital formation fell by 8.9% yoy, due to lower inventories, primarily grains, resulting from a larger summer crop harvest. Regarding external demand, exports of goods and services rose by 5.2% yoy (from 0.1% in 2Q25), due to higher placements of soybeans, meat, rice, and to a lesser extent, electricity, partially offset by lower foreign sales of wheat and vehicles. Notably, a contraction in exported services, in the context of a fall in auxiliary transport services and management services, partially offset by the increase in IT services. Likewise, inbound tourism in 3Q25 fell on annual basis. Imports of goods and services rose by 3.0% yoy (from -0.7% yoy in 2Q25) due to higher consumer goods mainly due to higher imports of clothing, automobiles, meat and pharmaceutical products. Likewise, imports of goods for intermediate use increased, driven by greater purchases of processed industrial supplies. Imports of capital goods rose, led by machinery and equipment. On the other hand, the annual contraction of outbound tourism continues, mainly related to a lower outflow to Argentina.

Our take: Our GDP growth forecast for 2025 stands at 2.3%, but now with downside risks due to the contraction in 3Q25 and the downward revision of the seasonally adjusted growth figures for 1Q25.