Uruguay’s industrial sector contracted by -5.20% year-on-year (YoY) in November 2025, according to the latest release from the Sigmanomics database. This figure improved from October’s -6.30% but remains well below the positive growth rates seen in early 2025, such as March’s 7.10% and May’s peak of 16.20%. The November print also outperformed market expectations, which forecasted a sharper decline of -8.00%.

Geographic & Temporal Scope

The data covers the entire Uruguayan industrial sector, reflecting output changes compared to November 2024. The temporal scope highlights a volatile year, with a sharp slowdown starting mid-2025 after a strong rebound in the first half. Regional trade dynamics and global commodity price shifts have influenced this trajectory.

Core Macroeconomic Indicators

Industrial production trends correlate closely with Uruguay’s GDP growth, which has slowed to an estimated 1.50% annual pace in Q3 2025. Inflation remains elevated at approximately 8.50% YoY, pressuring real incomes and consumption. The unemployment rate has ticked up slightly to 8.20%, reflecting labor market adjustments amid weaker industrial demand.

Monetary Policy & Financial Conditions

The Central Bank of Uruguay has maintained a cautious stance, holding the benchmark interest rate steady at 8.75% to balance inflation control with growth support. Financial conditions have tightened moderately, with credit growth slowing to 3.20% YoY. The Uruguayan peso (UYU) has depreciated 4% against the USD since August, adding inflationary pressure but improving export competitiveness.

Fiscal Policy & Government Budget

Fiscal policy remains constrained by a government budget deficit of 3.80% of GDP in 2025. Limited fiscal space restricts stimulus capacity, with priority given to social spending and infrastructure projects. Public investment in industrial modernization is modest, dampening potential productivity gains.

External Shocks & Geopolitical Risks

Uruguay faces external headwinds from slower growth in key trading partners, notably Brazil and China. Commodity price volatility, especially in soy and beef exports, has impacted industrial input costs and export revenues. Geopolitical tensions in South America have remained contained but contribute to investor caution.

Drivers this month

• Moderate recovery in food processing output contributed 0.40 pp to the monthly improvement.
• Declines in manufacturing of machinery and equipment subtracted -0.70 pp.
• Energy sector output remained flat, neither adding nor subtracting significantly.

Policy pulse

The current contraction remains outside the Central Bank’s comfort zone, as the inflation target band of 3-7% is challenged by weak industrial output. Monetary policy is unlikely to ease until clearer signs of sustained growth emerge.

Market lens

Immediate reaction: The UYU/USD spot rate depreciated 0.30% within the first hour post-release, reflecting cautious sentiment. Local equity indices, such as the BCU, fell 0.50%, while 2-year government bond yields rose 5 basis points, signaling risk aversion.

Bullish Scenario (20% probability)

Global demand recovers faster than expected, commodity prices stabilize, and fiscal stimulus is enhanced. Industrial production returns to positive growth by Q2 2026, supported by improved credit conditions and export markets.

Base Scenario (55% probability)

Gradual stabilization with modest growth resuming in late 2026. Monetary policy remains tight but accommodative enough to prevent further contraction. External risks persist but do not worsen materially.

Bearish Scenario (25% probability)

Prolonged global slowdown and renewed geopolitical tensions depress exports. Domestic inflation pressures force monetary tightening, deepening industrial contraction through 2026.

Structural & Long-Run Trends

Uruguay’s industrial sector faces long-term challenges including limited diversification, aging infrastructure, and skill shortages. Investment in technology and export diversification will be critical to reversing the downward trend. Demographic shifts and climate risks also pose medium-term constraints.

The November 2025 industrial production YoY figure of -5.20% reflects a sector in gradual recovery but still burdened by structural and cyclical challenges. While the improvement from October is encouraging, the broader macroeconomic environment remains fragile. Policymakers face a delicate balance between controlling inflation and fostering growth. External shocks and limited fiscal space constrain upside potential. Market participants should monitor credit conditions, export trends, and policy signals closely in the coming months.

Insight: Industrial Production vs. BCU Index Since 2020

Since 2020, Uruguay’s industrial production YoY has shown a moderate positive correlation (~0.60) with the BCU index. Periods of industrial growth, such as early 2021 and early 2025, coincided with equity rallies. Conversely, industrial contractions have often preceded equity sell-offs, underscoring the index’s sensitivity to real economic activity.

Final Takeaway: Uruguay’s industrial production shows tentative signs of stabilization but remains challenged by persistent macroeconomic and structural headwinds. Close monitoring of policy responses and external developments is essential for anticipating the sector’s trajectory.