Uruguay is set for a political shift to the center-left as Yamandu Orsi took office on Saturday as the country's next president.

Orsi, a 57-year-old former mayor backed by leftist ex-President Jose “Pepe” Mujica, narrowly won the November election against the ruling center-right coalition.

As a moderate, Orsi has promised to strike a different balance between social welfare and economic growth by ushering in what he described as a “modern left” agenda.

In his inaugural address at Montevideo’s Legislative Palace, Orsi said that “a time of re-foundation is not starting, but one of new proposals and permanent construction”, in a room that broke into cheers and applause after he credited iconic leftist Mujica.

Orsi also thanked outgoing conservative President Luis Lacalle Pou who presented him with the presidential sash during a windy ceremony outdoors, where they shared a hug.

During the campaign, Orsi sought to reassure Uruguayans he would avoid a sharp policy shift in the relatively stable and wealthy South American nation of 3.5 million people, known for its cattle ranches and liberal policies on legalised cannabis.

While Uruguay’s economy, driven by farm exports, is on track for another year of steady growth in 2025, high living costs, inequality and persistent levels of violent crime have dented the popularity of Lacalle Pou’s outgoing government.

“The destiny and future of this country has to change,” Orsi said in an interview with Reuters ahead of the election, and that his Broad Front coalition was the force to push that change, bolstered by a senate majority secured last year.

Nearly 19 percent of the Uruguayan population last year lived in a situation of “multidimensional” poverty, according to a report published on February 19 by the National Statistics Agency (INE). Calculations were established by monitoring those deprived in 15 areas across education, housing, social protection and employment.

The incoming administration has pledged to focus on the less fortunate and stimulate growth by attracting investors and skilled workers, without raising taxes.

Foreign Policy Balancing Act

Uruguay’s new government faces a more delicate balancing act when it comes to foreign policy amid global trade tensions. China is the soy and beef producer’s top trading partner, followed by neighboring Brazil. Meanwhile Uruguay remains a key US ally in the region, collaborating on areas like cybersecurity and organized crime.

“Uruguay will be under a lot of pressure from the US to limit Chinese investment in strategic sectors like infrastructure and telecommunications,” said Uruguayan analyst Nicolas Saldias at the Economist Intelligence Unit.

Saldias pointed to how there were more opportunities to boost US trade, which increased 68 percent in 2024 compared to the previous year, so the incoming government will have to “exercise its diplomatic muscle” when negotiating with the Trump administration as it looks to get partners onside with US interests.

Uruguay has been in negotiations over a bilateral trade deal with Beijing since 2021, with Montevideo also pushing for a wider trade agreement between China and the South American trade bloc Mercosur, that in December penned a deal with the European Union after decades of talks.

Closer to home, Orsi will need to contend with two powerful Mercosur members and ideologically opposed neighbors — Brazil, run by leftist President Luiz Inacio Lula da Silva and Argentina, where radical libertarian Javier Milei took office in 2023.

Argentina’s Milei said he could not attend the inauguration due to the opening of congress that coincides on Saturday but, Lula da Silva and fellow left-wing president Gabriel Boric of Chile were present.

Orsi has already broken with some of Uruguay’s previous foreign policy norms. Following his November 24 victory, he said he would decide “in the moment” whether to invite Venezuelan President Nicolas Maduro, who has become increasingly isolated in the region following a disputed July election.

Ultimately, the decision of whom to invite was left to the outgoing Lacalle Pou government that blocked representatives arriving from Venezuela, Cuba and Nicaragua on grounds undemocratic regimes governed them.