(Bloomberg) -- Uruguay’s Yamandu Orsi will be sworn as president Saturday for a five-year term as a left-wing government returns to office even as its neighbors in Latin America are shifting right.
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Orsi’s Broad Front party is coming back to power after he successfully tapped voter angst about violent crime and inequality to win last November’s runoff election. He pitched himself as the “safe change” candidate in contrast to more flamboyant outsiders that roiled politics in the region, such as Argentine President Javier Milei.
The Broad Front enjoys a solid majority in the Senate but needs the support of two opposition lawmakers in the lower house to pass its legislative agenda.
Orsi inherits an economy that is expected to grow 2.5% this year with unemployment below pre-Covid levels. The 57-year-old former governor promised to boost growth that averaged about 1.2% in the last decade through a mix of tax incentives and policies that promote agriculture, high tech and manufacturing. His most radical proposal would lower the minimum retirement age to 60 from 65 as part of a broader overhaul of the social security system.
Orsi and his economic team led by Gabriel Oddone will have to find the money to make good on a raft of expensive campaign promises while trimming a fiscal deficit that hit a worrisome 4.1% of gross domestic product in December. The five-year budget bill that goes to Congress in June will shed light on whether the new administration uses the tax-and-spend playbook of previous Broad Front governments.
Investors will also scrutinize Orsi’s commitment to price stability given the Broad Front tolerated relatively high levels of inflation when it governed the country from 2005 to 2020. Inflation logged an unprecedented 20 months within the central bank’s 3% to 6% target in January thanks to tight monetary policy though long-term inflation expectations are stuck near the top of that range.
On foreign policy, Orsi faces the challenge of navigating China-US tensions and global trade norms upended by President Donald Trump’s tariffs. Brazil and China are Uruguay’s top trade partners, but the US is the leading buyer of its IT exports.
Incoming Foreign Affairs Minister Mario Lubetkin said in a recent interview the Orsi administration will seek to join the New Development Bank and strengthen The Community of Latin America and Caribbean States.