Technically, yes. The amniotic fluid contains the baby's urine. However, that fluid is constantly being recycled and replenished. They don't stay in the same fluid for very long. The mother's body filters it out and replenishes it with new fluid - just like blood, lymph, sweat, etc. This is one reason why the mother needs to stay well hydrated during pregnancy.
The baby ingests and "inhales" amniotic fluid during pregnancy. The birth canal helps squeeze a lot of that amniotic fluid out of their lungs when they're born, and then they start to breathe air. During pregnancy, they practice breathing by inhaling amniotic fluid into their lungs. This helps their lungs mature so they're ready to breathe air after they're born. During pregnancy, they get oxygen and nutrition from the umbilical cord, which is connected to the placenta.