Latin America Edge

Research evidence excerpt

Latin America Edge

. We continue to expect growth to moderateslowed to 2.9%oya, mainly because transportation prices

ahead, driven by slowing investment and softer private con-dropped after temporary fuel subsidies were introduced, push-

sumption, with the latter constrained by re-accelerating infla-ing pump prices down sharply. However, fuel prices remain

tion and heightened El Niño risks toward year-end. Thesehigh on an annual basis, so subsidies are cushioning rather

headwinds should be partially offset by increased social trans-than eliminating energy-driven pressures. We expect the sub-

fers and by a fading oil price shock under a prospective US-sidies to keep transportation inflation contained through June

Iran deal.and July, with some pressure returning once the subsidies end

around August. Food prices also fell, pulling inflation down, Externally, while potential El Niño effects add to the inflation

but core pressures remain stickier, with dynamic core at outlook, we expect they will also support an improvement in

3.8%oya, likely reflecting services inflation. El Niño-related the terms of trade via stronger crop yields (see our recent

supply pressures could lift fresh food inflation as early as note). Against this backdrop, we forecast 1.0% q/q (saar)

July. Our forecast for year-end inflation is 3.8%, still within growth in 2H26, down from a 1.8% average pace in 1H26.

Banguat’s target. We will reassess our quarterly profile if necessary as 2Q26

activity data become available.Trade data shows a challenging backdrop but some export

momentum. In April, exports rose 8.5%oya while imports Figure 3: Uruguay real GDP

jumped 11.9%oya; exports have been trending up on an annu- Index, sa, 2016=100

alized basis since late 2025. Import growth has cooled since 115