Regional Economic Outlook Latin America & Caribbean - July 2025

Subdued growth outlook shaped by largest economies

We project economic growth in Latin America and the Caribbean (LAC) to rise from 1.7% in 2024 to 2.1% in 2025, then ease to 1.8% in 2026, keeping it the slowest-growing emerging market region. Growth is shaped by divergent dynamics in the region’s three largest economies: Argentina (rebounding from recession), Brazil (dragged by high interest rates and political uncertainty) and Mexico (facing investor concerns over judicial quality and fallout from US policy changes under President Trump. 

US policy changes are creating significant external pressure for region

LAC is highly exposed to US policy changes due to its geographic proximity and economic integration. Mexico, Central America and the Caribbean are most exposed, given their strong ties to the US through trade, investment, remittances, and financial linkages. South America is more insulated due to more diversified trade partners and less open economies. However, also this commodity rich subregion is not immune to broader spillovers, such as elevated global policy uncertainty, persistently high US interest rates, lower oil prices, and a weaker US dollar. While South America, particularly copper exporters and Brazil, would be more directly affected by the escalation of Trump’s trade policies than other subregions, we expect the impact to remain relatively localised, even if all measures take effect from August 1.  

But stronger domestic policy records support broader resilience

These external pressures will test LAC’s improved resilience underpinned by stronger policy frameworks, independent central banks, flexible exchange rates and higher official reserves in most of the region.  
 

Interested in finding out more?

For a complete overview of our outlook for Latin America & the Caribbean and the potential impact of rising global volatility, please download the full report available in the related documents section below.