WASHINGTON, USA – Amid growing global economic volatility, countries in Latin America and the Caribbean must adapt their economic strategies to navigate increasing uncertainties, according to the advance chapter of the World Bank’s Latin America and the Caribbean Economic Review (LACER).
The report forecasts growth of 2.1 percent in 2025 and 2.4 percent in 2026, making it the slowest-growing region worldwide. Low investment, high debt, and a shifting external environment are major barriers to the region’s development.
“The global economic landscape has changed dramatically, marked by higher levels of uncertainty,” said Carlos Felipe Jaramillo, vice president for Latin America and the Caribbean at the World Bank. “Countries must recalibrate their strategies and advance bold and practical reforms that boost productivity, competitiveness, while tackling long-standing gaps in infrastructure, education, trade and governance to ensure job creation and better opportunities for businesses and citizens.”
Regional outlook
Despite some progress in controlling inflation, fiscal deficits remain a pressing concern, with the debt-to-GDP ratio expected to reach 63.3 percent in 2024, up from 59.4 percent in 2019.
The fast-evolving global economic environment adds further pressure, as persistent inflation in advanced economies may delay interest rate cuts and limit monetary policy options. Concerns around global trade restrictions create uncertainty around nearshoring and market access, contributing to a more cautious economic and business environment. Slowing growth in China, and cuts in overseas development assistance also contribute to the outlook.
“Access to technology and exploiting scale economies dictate that trade and FDI remain essential to accelerating growth in Latin America and the Caribbean, even in uncertain times. Diversifying trade destinations, expanding service exports, and pursuing potential nearshoring niches offer opportunities, but will require increasing both productivity and nimbleness. This, in turn, requires progress on long overdue reforms behind the border in business environment, human capital, and innovation,” said William Maloney, chief economist for Latin America and the Caribbean at the World Bank.