Government should pass referendum test in Uruguay

Significance

President Luis Lacalle Pou’s government has strong public support thanks to a tepid economic recovery and improvements in security, and despite a new wave of COVID-19 cases. However, the opposition obtained the support of more than 25% of registered voters to demand a referendum, which is set to become a virtual plebiscite on the government’s performance.

Impacts

• Optimism over a boost from tourism this year could be dashed if COVID-19 cases continue to rise.
• Growth in 2021 will not offset the sharp 2020 contraction; strong growth will not return for some time, following a drop-off since 2015.
• Falling real wages could stoke support for the opposition and a ‘no’ vote in the referendum.