Uruguay, a country whose name has often been synonymous with obscurity, will host its runoff presidential election on November 30, with incumbent President José Mujica vacating his seat to one of two candidates: Tabaré Vázquez or Luis Lacalle Pou. Voting in one of its closest elections since the establishment of its current regime, Uruguay is facing a fork in the road: the Broad Front Party’s Vázquez and the continuation of a state-guided economy, or the National Party’s Lacalle Pou and the adoption of a more conservative, smaller government that will further open the country up to international free trade. Preliminary polling data has the two rivals locked in a dead heat for the runoff election. Lacalle Pou is expected to gain the support of the right-wing Colorado Party, which had backed Pedro Bordaberry in the first round of presidential voting. To further complicate political predictions, this election includes approximately 250,000 new, highly unpredictable young voters who do not depend on print media or the radio, the dominant news mediums in Uruguay, instead relying on the Internet as their main source of news. As a result, gauging their political preferences is proving difficult in the weeks leading up to the runoff.
After a decade of strong growth, Uruguay is currently in a unique position to either step onto the international stage as an example of a self-sustaining Latin American economy or to falter and prove cynics of state-led development correct. In 2002, economic crises in Argentina and Russia dragged Uruguay into a severe economic recession, causing the country’s GDP to plummet by 20 percent, a bank holiday that catalyzed massive riots, and very slim odds of recovery. However, against all expectations, the Uruguayan economy was able to rebound. Learning from Argentina, Uruguay decided against the International Monetary Fund’s suggestion to default on its debt and convert bank deposits into bonds, choosing instead to establish a deposit-banking plan to back dollar deposits by 100 percent in order to restore confidence. The result has been consistent economic growth from 2004 through the present day. In 2014, Moody’s upgraded Uruguay’s bond rating from Baa3 to Baa2, citing Uruguay’s “consolidation of [the country’s] sovereign credit profile,” its “orderly transition towards lower, albeit more stable, growth levels,” and the “decline in Uruguay’s exposure to regional shocks and an increase in its commodity diversification.” Uruguay was able to pull itself out of a massive economic recession through state investment in industry and the implementation of a steady economic growth model.
Despite these economic advances, some questions still remain about the current status of Uruguay’s economy. Last year, Uruguay’s GDP grew by four percent, marking the twelfth year that the country did not fall back into a recession. However, the IMF has warned Uruguay that its inflation rate of eight percent could potentially lead to issues in the future. Uruguay’s unemployment rate, while low compared to many of its Latin American neighbors, currently stands at six and a half percent, and for the past four years, the value of the Uruguayan peso has been steadily decreasing, with current exchange rates standing at 25.54 Uruguayan pesos to one U.S. dollar.