Eight quarters of growth snap as construction and industry stall.

The decline in economic activity in February —the second consecutive month of contraction, according to data released today— breaks a streak of eight uninterrupted quarters of growth and forces the government to rethink its budget assumptions in real time, as Economy Minister Gabriel Oddone publicly acknowledges that there is "a fairly high probability" of revising the 2026 projections downward.

The figure is not merely statistical. According to El Observador, the sectors bearing the brunt —industry, construction and commerce— account for 44% of the country's private employment, which turns a technical contraction into a signal with concrete distributive consequences. This is not an adjustment in peripheral sectors: it is the core of the productive and urban economy that is slowing. Construction, driven for years by infrastructure projects and private urban development, has now posted two consecutive months of retreat alongside manufacturing, while retail commerce reflects a consumer still under cost pressure.

The Ceres research center, whose activity index is closely watched by local analysts, confirms that Uruguay is entering 2026 "with no firm signs of recovery." This was not the government's baseline scenario when it designed the National Budget: the Committee of Fiscal Experts has already trimmed its growth projections and, according to El Observador, is visibly drifting away from the assumptions underpinning the public spending plan. The gap between what was budgeted and what is likely is today one of the main risks to Orsi's administration.

Minister Oddone's response has been twofold: acknowledging the deterioration without alarmism while simultaneously vindicating macroeconomic stability as Uruguay's differentiating asset within the region. Speaking to international media, Oddone described the three shocks the economy absorbed in the recent period —without specifying their exact nature in the available articles, but alluding to external and internal factors— and argued that the measures adopted keep the country "in motion." At the same time, he flatly ruled out the implementation of a 1% wealth tax on the richest, a proposal circulating in the regional political debate: "It is not part of the priorities or the ideas the government wants to advance," he said with surgical precision, closing that door before it fully opened.

Nevertheless, Ámbito reports that the government is contemplating a fiscal "Plan B" should the economy fail to reach expected growth, a sign that contingency planning is already on the table even if its urgency is not publicly acknowledged. That backup plan has not been detailed, but its mere existence confirms that the distance between the official scenario and the probable scenario has become wide enough to justify an alternative strategy.

There are, however, nuances that prevent a purely pessimistic diagnosis. More recent data, also reported by El Observador, suggest that industry and construction showed some rebound at the margin, and that consumer credit stopped falling, which could be the first hint of stabilization. The question is whether this is a technical bounce after the drop or the start of a sustained recovery; the available evidence is not conclusive.

Against this backdrop of domestic uncertainty, the announced visit by Kristalina Georgieva, Managing Director of the International Monetary Fund, takes on a dimension beyond protocol. According to the government, Georgieva will meet with President Orsi, Minister Oddone and the head of the Central Bank, which constitutes an implicit institutional endorsement of notable value at a moment when projections are being revised downward. Fitch Ratings, for its part, keeps Uruguay among the four best-rated sovereigns in Latin America —alongside Chile, Peru and Mexico— which preserves access to external financing at reasonable costs and sets the country apart from neighbors with more volatile fiscal dynamics.

The Central Bank, meanwhile, is preparing measures to reduce the dollarization of the economy, according to Bloomberg Línea, a long-term agenda that gains relevance when the exchange rate acts as an anchor for expectations but also as a competitiveness factor. Competitiveness, precisely, is the great structural debate underlying the current juncture: Ignacio Munyo, of the Center for Studies on Economic and Social Reality, identifies it as "the great problem Uruguay must solve," a position that resonates with the analysis of Frente Amplio deputy Daniel Caggiani, who from the Movimiento de Participación Popular proposes a modernization plan combining a lower cost of living with productivity gains. That the diagnosis on competitiveness is shared by independent analysts and legislators from the governing coalition does not eliminate the difficulty of finding the remedy: Uruguay is expensive for structural reasons —labor costs, energy, logistics, market scale— that are not corrected by piecemeal measures.

On the trade front, Oddone reaffirmed his confidence in the conclusion of the European Union-Mercosur agreement and vindicated multilateralism as a strategic stance, at a moment when global tariff tensions —driven by Washington's trade policy— are generating uncertainty for exporting economies such as Uruguay's. Ratification of that agreement would be a first-order trade milestone for the local agribusiness sector.

What to watch closely in the coming weeks: the release of March activity data, which will tell whether the marginal rebound in industry and construction has continuity; the formal presentation of the fiscal "Plan B" or its shelving; the concrete content of the Central Bank's announcements on de-dollarization; and the messages the IMF sends after Georgieva's visit, which will be read by the market as an implicit assessment of the solidity of Uruguay's macroeconomic framework in a year in which the numbers are not coming out as expected.