The economy is not doing well, although major media outlets claim otherwise.

The narrative that Uruguay is "doing well economically" falls apart when examining the realities that lie beneath the surface. Far from being a success story, the country's economy faces deeply rooted problems that threaten its stability and future.

The last few decades saw a commodity supercycle that lifted many regional economies, with countries taking advantage of a wave of booming raw materials. Uruguay benefited temporarily, but this tailwind concealed underlying weaknesses. Prosperity was fleeting, and the economy now faces challenges that the commodity boom failed to solve.

An obvious problem is persistent unemployment, driven by an inflexible minimum wage. By setting wages at levels that don't align with market dynamics, jobs are stifled, leaving many without the possibility of working. This rigidity has created a structural barrier to growth, keeping unemployment stubbornly high.

You may also be interested in this analysis of the pay-as-you-go pension system, which shows how an unsustainable and poorly designed structure can drag an entire country into economic stagnation.

Inflation tells a similar story of problems. Although it has been temporarily controlled, this came at a high cost: extremely high interest rates in pesos, reaching 10% per year, double what the U.S. Federal Reserve offers. This has encouraged carry trade opportunities, attracting speculative money but contributing little to sustainable growth. Worse still, despite these measures, inflation remains rampant, between 6-8% per year, eroding purchasing power and savings. Past policies, such as the central bank's sale of dollars, have worsened the problem, leaving the currency vulnerable.

The fiscal deficit is another warning sign. No serious effort has been made to reduce it, and any claim of modest growth rings hollow when the government continues to spend beyond its means. This is not a sustainable path; it's a burden that's accumulating for future generations.

The social security system worsens the difficulties. Although raising the retirement age was a step in the right direction, the model remains essentially unviable. Without deeper reforms, it's a ticking time bomb that will drain resources and put even more pressure on the economy.

You may also be interested in this column on the myth of the welfare state, which unmasks the promises of well-being financed by debt, clientelism, and accounting fiction.

Even the much-cited GDP growth figures are misleading. Often inflated by short-term spending increases, they hide the reality of a growing public debt that we will pass on to our children and grandchildren. The excuse that "everyone does it" doesn't make it any less reckless or unfair.

Uruguay's economic health is a façade. The commodity boom sustained it temporarily, but the cracks are now undeniable. High unemployment, uncontrolled inflation, unchecked deficits, an unsustainable social system, and growing debt paint the picture of a country far from being "well." It's time to face these truths and demand real solutions.