The economic crisis due to the COVID-19 pandemic has negatively affected Uruguay’s economy. In 2020, gross domestic product (GDP) fell by 5.9% annually. The impact of the crisis has affected, above all, the most vulnerable groups. In 2020, the poverty rate based on latest international comparable estimations has reached 5.1%, increasing by two percentage points, compared to a year earlier, although it continues to be one of the lowest rates in Latin America and the Caribbean (LAC) and considerably below the regional average (30.9%). The quality of health services helped cushion the crisis. In 2020, 75.1% of people in Uruguay declared being satisfied with the quality of health care, just two percentage points lower than ten years earlier. This proportion is much higher than in LAC (48.2%) and even higher than the Organisation for Economic Co-operation and Development (OECD) average (70.7%). Uruguay stands out as the country with the highest public expenditures on health care in LAC: 9.3% of GDP, compared to 6.8% average in LAC and 8.8% in the OECD. Although the pandemic affected the education system as well, Uruguay was among the LAC countries that managed to minimise disruption in education for students. Between March 2020 and May 2021, schools were fully closed for 14 weeks, much less than the LAC average (26 weeks) and below the OECD average (15 weeks). Moreover, during the weeks of closure, online learning helped mitigate the negative impact on students. In Uruguay, 47.4% of schools had access to effective online learning, more than two times higher than the LAC average (32.5%), although slightly below the OECD average (54.1%).

Uruguay has undertaken broad mitigation efforts to tackle the health crisis and reduce the impact of COVID-19 on the most vulnerable households, workers and enterprises. The COVID-19 Solidarity Fund was instrumental to implement these measures. When the pandemic hit the region, Uruguay reinforced and extended an existing successful cash transfer programme (Asignación Familiar Plan de Equidad) to support the most vulnerable households. Uruguay implemented an electronic wallet application (TuApp) that allows users to receive government coupons for food redemption and to make diverse payments. Additionally, the government introduced a special unemployment benefits scheme for all workers affected by the pandemic and has extended its duration. Furthermore, Uruguay granted tax extensions and benefits, particularly regarding pension contributions, and added a monthly monetary incentive for businesses to reintegrate or hire employees. To help mitigate the impact on firms, Uruguay implemented a series of transfers, credit possibilities and other benefits, particularly for micro, small and medium-sized enterprises (MSMEs).

Going forward, Uruguay’s medium- and long-term plans focus on the importance of firms’ resilience and job creation and the sustainability of social policies. The main drivers are investments to promote employment, new legal frameworks for investments and social housing, tax innovations for MSMEs, and a social security reform. Moreover, Uruguay is designing a foreign trade policy to improve the presence of national products abroad.

Uruguay’s international co-operation projects within and beyond the region focus on long-term structural needs and on responding to the pressing challenges due to the crisis. Within LAC, Uruguay engaged in a co-operation project with Mexico that aimed to strengthen the capacities of health teams in the prevention and containment of the pandemic. With Colombia, both countries launched an initiative to share strategies and good practices for overcoming poverty throughout the crisis. Furthermore, with the private sector and the IDB, the “Renewable Energy Innovation Fund” was created, aiming to decarbonise the industry and transport sectors and ensure universal access to renewable sources. Beyond LAC, Uruguay participated in co-operation projects focused on gender and intergenerational perspectives in response to COVID-19 socio-economic impacts with the United Nations. Regarding job creation and consolidation of an entrepreneurial ecosystem, triangular co-operation was promoted with Germany and Paraguay. In addition, Uruguay currently takes part in a bilateral partnership with the European Union that aims to strengthen their strategic dialogue, adapting triangular co-operation initiatives to respond to the effects of the pandemic and promoting the Development in Transition approach and the United Nations 2030 Agenda.


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