Uruguay achieved a smooth power transfer and President Jose Mujica took office in early 2010. There economic recovery was gaining momentum. The economic growth rate was high in the first half of the year but declined slightly in the second half. There was only very limited policy space for an expansionary fiscal policy. The Mujica government gave emphasis to transportation and the energy industry when making investment. Due to the increase of inflation pressure，it pursued a moderately tight monetary policy. It is proved that economic growth and income distribution policies contributed greatly to the reduction of poverty rate. Diplomatically the Mujica government sought to deepen the participation into the Mercosur and had improved Uruguay’s relations with Argentina.