The United Nations regional commission presented its “Preliminary Overview of Economies of Latin America and the Caribbean 2025,” in which it forecasts an average regional expansion of 2.4% in 2025 and 2.3% in 2026.

The Economic Commission for Latin America and the Caribbean (ECLAC) indicated today that the region continues along a path of low growth, forecasting that the main sources that have sustained economic activity in recent years – namely, private consumption and external demand – will lose vitality in 2026. According to its new estimates, ECLAC projects regional GDP growth of 2.4% in 2025 and 2.3% in 2026. If these forecasts are borne out, the region will accumulate four consecutive years of low growth with average annual growth of just 2.3%.

At the presentation of its annual report Preliminary Overview of the Economies of Latin America and the Caribbean 2025, the United Nations regional commission noted that private consumption will lose strength in 2026. Consumption has been the main driver of economic activity in recent years, accounting for more than half of the growth in regional GDP. However, ECLAC projects that this contribution will decrease in 2025 and 2026, in a context marked by less dynamic external demand and lower employment growth.

The report points to differences in economic activity trajectories at a subregional level, with South America seen growing by 2.9% in 2025, driven by recoveries in Argentina, Bolivia and Ecuador after their economies contracted in 2024. In 2026, the South American expansion is forecast to decelerate to 2.4%, due to lower growth in the majority of its economies.

Meanwhile, Central America is seen registering a 2.6% expansion in 2025, affected by weaker demand from the United States. In 2026, growth is seen improving to 3.0%, although vulnerabilities remain in relation to trade, remittances, access to financing and exposure to climate change.

The Caribbean is expected to grow by 5.5% in 2025 and 8.2% in 2026, underpinned by significant growth in oil activity in Guyana, and aided by the normalization of tourism and an improved performance in the construction sector. However, this subregion is highly exposed to natural disasters, which constrains its economies’ capacity for growth.

ECLAC’s Preliminary Overview 2025 estimates that employment growth will also lose momentum, slowing from 2.0% in 2024 to 1.5% in 2025 and 1.3% in 2026. In terms of prices, median regional inflation is seen reaching 3.0% in 2026, above the 2.4% estimated for the end of 2025 but below the levels seen during the inflationary shocks of 2021-2022, and around the values targeted by central banks in the region.

Latent risks

The report warns that the scenario in 2026 will be subject to multiple external and internal risks.

With regard to external risks, the region’s growth will be contingent upon the dynamics seen in GDP growth globally, especially among its main trading partners, and in global trade. Another influential factor will be the United States’ monetary policy stance, which has been more expansionary, and possible changes to that country’s economic and trade policy. In addition, regional growth in 2026 may be affected by uncertainty in international financial markets and possible volatility in external financing flows, including Foreign Direct Investment and remittances.

On the domestic front, GDP growth may be affected by the performance of labor markets and its impact on household income and, therefore, consumption, due to the structural vulnerability of many of the region’s economies to natural disasters and due to the pressures arising from the hefty resources earmarked for debt service. In addition, the speed with which the inflation rate declines, and monetary policy is eased, will be decisive for the evolution of consumption and investment.

Towards higher, more sustained and resilient growth

Given this outlook, ECLAC stresses the urgency of strengthening and expanding macroeconomic policy space. In a global environment transformed by economic fragmentation, climate change, demographic shifts and a fast-paced technological revolution, countries need policy frameworks that are capable of reducing vulnerabilities while simultaneously mobilizing resources for a productive transformation. 

The institution’s Executive Secretary, José Manuel Salazar-Xirinachs, contended that to escape the trap of low capacity for growth, the region needs more ambitious productive development policies – even more so today under new conditions of geoeconomic rivalry – combined with macroeconomic policies that would mobilize more resources for growth, innovation, economic diversification, productive transformation and the creation of quality jobs. Only in this way will the region be able to bolster its resilience and move towards more productive, inclusive and sustainable development.