Uruguay's upcoming presidential runoff is unlikely to yield significant foreign or domestic policy changes, but a victory by the conservative candidate could increase Montevideo's push to deepen commercial ties with China and reform the South American trade bloc Mercosur. Yamandu Orsi of the leftist opposition party Frente Amplio secured 43.9% of the vote in the first round of Uruguay's presidential election on Oct. 27, outperforming Alvaro Delgado of the ruling National Party, who came in a distant second with 26.8%. Another 20.2.% of the vote was split between three other presidential candidates, all of whom belong to parties that are part of the ruling center-right coalition and have pledged to support Delgado when he competes against Orsi in the Nov. 24 run-off race. The opposition Frente Amplio also outperformed the governing National Party in concurrent legislative elections on Oct. 27, having secured a majority in the upper house of Uruguay's General Assembly and falling just two seats short of a majority in the lower house. 

• Outgoing President Luis Lacalle Pou of the center-right National Party came to power in March 2020, ending 15 years of leftist party rule under Frente Amplio. Although the COVID-19 pandemic and Uruguay's most severe drought in 70 years posed challenges, Lacalle Pou managed to pass a series of structural reforms to the country's economic, labor, environmental, pension, education and security frameworks. He started his term with an approval rating of 65%, but it has gradually declined since then, falling to 45% in September amid voters' frustration with rising crime and inflation.

While Uruguay remains a stable and mostly prosperous and safe country relative to its Latin American peers, the election occurred amid growing popular discontent with rising crime and inflation levels. Delgado, who served as secretary to the presidency from 2020 to 2023, has campaigned on maintaining many of Lacalle Pou's policies. His poor performance in the first round of the presidential election partially reflects significant discontent with the Lacalle Pou administration amid its perceived failure to address rising crime and inflation. For decades, Uruguay has had a stable political environment, with functioning democratic institutions, a high GDP per capita and low perceptions of corruption when compared to the rest of Latin America. But in recent years, the country has seen an increase in violent crime and homicides linked to organized drug trafficking gangs. Against this backdrop, Uruguay's worsening security situation was among voters' top concerns heading into the polls on Oct. 27, as the current Lacalle Pou administration's policies of increased police presence on the streets, longer prison sentences and record incarceration numbers have failed to reduce violent crime. Voters' other top concern was the cost of living, as the Lacalle Pou administration has also struggled to tamp down on inflation, which has eased since surging in the wake of the COVID-19 pandemic but remains high, with Uruguay being one of Latin America's most expensive countries. 

• From 1990 to 2011, Uruguay's homicide rate remained below 7 murders per 100,000 inhabitants (except for 1997 and 1998). It hovered around 8 killings per 100,000 inhabitants between 2011 and 2017 until it jumped to 12.28 murders per 100,000 residents in 2018. Since then, the homicide rate has gradually declined, but it still remains above the country's historic average, having stood at 8.9 homicides per 100,000 inhabitants in 2023. 
• Annual inflation in Uruguay reached 9.76% in 2020 amid the COVID-19 pandemic. Consumer prices have since declined but remain elevated, with annual inflation currently standing at around 6%.

The two presidential front-runners have broadly similar policy agendas, meaning Uruguay's political system and regulatory frameworks will likely remain stable regardless of who wins the Nov. 24 run-off. The run-off is expected to be a tight race. While frustration with the current conservative administration is driving strong support for Orsi's center-left platform, Delgado still stands a good chance at winning if those who voted for the other three presidential candidates from the ruling coalition in the first round turn out for Delgado in the second round. But while closely contested, the election is unlikely to fuel protests or other triggers that could destabilize the current administration in its final months in office. The outcome is also unlikely to heighten political or regulatory volatility, as Uruguayans have historically shown little appetite for sweeping systematic changes, as evidenced by the fact that the two top presidential contenders have outlined generally similar, moderate proposals. Leftist candidate Orsi has pledged to expand Uruguay's social safety net to ease the cost of living crisis, but has ruled out tax hikes; he has also said he would focus on economic growth by attracting investments in innovation and technology and upskilling the country's labor force to tackle the country's growing fiscal deficit. Delgado, meanwhile, has strongly positioned himself as the continuity candidate, promising to maintain President Lacalle Pou's efforts to attract investment and bolster the economy while maintaining fiscal discipline without making cuts to social spending. 

• Uruguay's fiscal deficit stood at 3.1% of its GDP in 2023, while the country's gross public debt reached 69% of GDP last year. 

However, Orsi and Delgado's agendas do notably differ on foreign trade, with the former more likely to reduce frictions within the South American trade bloc Mercosur and the latter more likely to deepen ties with China and increase calls to reform Mercosur's customs rules. The two candidates most diverge on matters regarding the regional trade bloc Mercosur and China. Orsi opposes current President Lacalle Pou's push to negotiate bilateral trade deals with China and Turkey (which violates Mercosur rules) and has said that while he would welcome additional investments from China, he would only pursue deals that are in compliance with Mercosur, adding that leaving the bloc would not be an option. Delgado, by contrast, shares the current government's assessment that Mercosur has been holding Uruguay back in commercial terms; he has proposed lowering regulatory burdens and import tariffs to increase competition and bring cheaper goods into Uruguay, thereby helping reduce inflation while also boosting exports at better conditions under a potential free trade agreement with China. However, if Delgado wins, he is unlikely to withdraw Uruguay's membership in Mercosur given that intra-bloc commerce is a significant part of Uruguay's foreign trade; instead, he is more likely to pressure for a reform of the customs union and/or increase trade ties with China. 

• Uruguay is the smallest country in Mercosur, which also includes Argentina, Bolivia, Brazil and Paraguay. Membership in the regional trade bloc thus provides an important economic platform for Uruguay by giving Uruguayan companies preferential access to larger consumer markets. However, since its creation in 1991, Mercosur has only signed four free trade agreements: with Israel in 2007, Egypt in 2010, the Palestinian Authority in 2011 (though this was only put into effect by Brazil in July 2024), and Singapore in 2023. In 2019, Mercosur and the European Union agreed on a draft trade deal, though the agreement has not been ratified due to environmental and protectionist concerns from both sides. 
• China is Uruguay's main trade partner, accounting for 22% of the South American country's exports in 2023. China was the largest importer of Uruguayan beef, soybeans and wool in 2023, and was the second-largest source of all Uruguayan imports more broadly, resulting in a trade surplus of $140 million for Montevideo. Uruguay joined China's Belt and Road Initiative in 2018, and the two countries elevated their ties to a comprehensive strategic partnership in 2023.