Boosting Uruguay’s Economy: How Reforms and Artificial Intelligence Could Transform Growth

An IMF–World Bank study says Uruguay can accelerate growth by pairing long-delayed structural reforms with artificial intelligence adoption, boosting productivity, investment, and innovation. The report projects that embracing AI and easing bureaucratic and financial constraints could lift Uruguay’s GDP by up to 9 percent over the next three decades while ensuring more inclusive, technology-driven development.

Uruguay’s economic story is entering a new chapter. A joint analytical paper by the International Monetary Fund (IMF) and the World Bank, titled “Boosting Growth in Uruguay Through Structural Reforms and Artificial Intelligence”, suggests that the South American nation’s future prosperity depends on a dual strategy: modernizing its economic structure while embracing the transformative power of artificial intelligence. Authored by IMF economists Maria Alexandra Castellanos, Christopher Evans, Roberta Guarnieri, and Hector Perez-Saiz, the study lays out a roadmap for reigniting productivity, investment, and innovation in a country long admired for its stability but now searching for renewed momentum.

Strong Institutions, Slowing Growth

For decades, Uruguay has stood out as one of Latin America’s best-governed nations, politically stable, transparent, and socially inclusive. Yet, despite these strengths, its economic convergence with advanced economies has slowed. GDP per capita has hovered around one-third that of the United States since the 1980s, while annual growth has averaged just over one percent in the last decade. The IMF and World Bank note that this slowdown reflects weak productivity, low investment, and limited integration into global value chains. Uruguay’s human capital and fiscal prudence are strong, but its growth engine has lost steam, constrained by rigid labor markets and modest technological adoption.

Reform as the Engine of Renewal

The report emphasizes that structural reforms could lift Uruguay’s growth potential by as much as 1.5 percentage points a year. Priorities include expanding credit to small and medium-sized enterprises, simplifying regulation, and modernizing labor laws to boost flexibility and competitiveness. Financial deepening, through better access to credit and more diversified capital markets, could alone add more than one percentage point to annual GDP growth. The authors underline that Uruguay’s sound governance and macroeconomic stability provide the ideal platform for reform, allowing the country to move from resilience to dynamism.

Artificial Intelligence: The Next Productivity Frontier

The study identifies AI adoption as a pivotal driver of future growth, with Uruguay ranking among the top five emerging economies in the IMF’s AI Preparedness Index. The country’s strong digital infrastructure, advanced e-governance, and open data systems make it fertile ground for innovation. About one-third of Uruguay’s workforce is in occupations exposed to AI, particularly in services and administrative roles, but many of these jobs also show high complementarity, meaning technology can enhance human productivity rather than replace it. Teachers, doctors, and managers are expected to benefit the most from AI tools that improve efficiency and decision-making. The paper projects that widespread AI integration could raise Uruguay’s GDP by nearly nine percent over three decades, though policymakers will need to address potential inequalities and ensure inclusive access to digital opportunities.

Businesses Ready, Bureaucracy Lagging

Drawing on the World Bank’s 2024 Enterprise Survey, the report finds that Uruguay’s private sector is highly innovative but weighed down by bureaucracy. It takes an average of 167 days to secure an operating license and over a month for import permits. Tax rates and skill shortages remain top business complaints. Yet, more than 70 percent of firms have launched new products or services in recent years, and nearly a third have invested in research and development, far above Latin America’s average. This entrepreneurial spirit, combined with a stable business environment, gives Uruguay a strong foundation to absorb and expand AI technologies once regulatory bottlenecks are eased.

Reforming to Compete Globally

The IMF’s trade analysis reveals that lowering export costs by 30 percent could increase the number of exporting firms by up to 60 percent. Exporters tend to be larger, more productive, and digitally advanced, precisely the firms positioned to thrive in an AI-driven economy. The report recommends strengthening logistics, simplifying customs procedures, and investing in digital trade infrastructure to help Uruguay integrate more deeply into global markets. It also calls for inclusive policies, such as retraining programs and digital education, to ensure workers in low-exposure sectors are not left behind.

A Model for Inclusive Digital Transformation

Ultimately, the IMF and World Bank see Uruguay as a nation poised between maturity and transformation. Its solid institutions and social stability give it a rare opportunity to pair structural reform with technological progress. If the country can translate its governance excellence into competitive innovation and ethical AI deployment, it could become Latin America’s model for equitable digital growth. The report concludes that Uruguay’s next economic leap will not come from stability alone, but from harnessing technology, talent, and trust to build a smarter, fairer, and faster-growing economy.