S&P Global Ratings revised Uruguay's outlook to stable from negative as the country demonstrated resilience and achieved a real GDP growth of 1.5% in 2016.

The rating agency also affirmed Uruguay's BBB long-term foreign and local currency sovereign credit ratings and A-2 short-term foreign and local currency ratings.

S&P Ratings expects the country's economy to strengthen gradually, pushing income levels higher and expanding its revenue base, which will create greater flexibility in formulating fiscal and monetary policy. The improved conditions will also improve Uruguay's capacity to absorb debt. Currently the country has a moderate debt burden and low financing risks.

The stable outlook suggests a continued moderate level of growth and gradual fiscal consolidation. It is expected that the government will further develop local capital markets and reduce the country's vulnerability to external shocks. The rating agency also expects continuity in economic policies during the next three to four years.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.