More reforms will follow thin Uruguay referendum win

Significance

The result was narrow, allowing for different readings by the government and opposition. While the government celebrated the support for the reform package, the opposition was bolstered by the high turnout and is preparing new moves to pressure the government with an eye to 2024 elections.

Impacts

• The referendum win will reassure investors that President Lacalle Pou will be able to continue economic reforms.
• Economic recovery will not be sufficient to boost employment and wages following several years of stagnation and recession.
• Rising interest rates are unlikely to ease inflation driven by food and fuel prices, especially following Russia’s invasion of Ukraine.