Latin America and the Caribbean will grow only 2.1% in 2025, the World Bank announced today, which highlights the partial containment of inflation, but warns about the low growth cycle, high debt and little investment in which it is immersed, according to the advance of the economic report of the region released this Wednesday.
The agency recommends rethinking economic strategies before a volatile global environment. “Bold reforms are required that promote productivity and competitiveness,” said Carlos Felipe Jaramillo, vice president of the World Bank for the region. Important gaps in infrastructure, education, trade and governance persist.
“Foreign direct investment and trade remain key to accelerating growth, even in uncertain contexts,” said William Maloney, chief economist of the organism.
The projected growth by 2025 is greatly explained by the expected recovery of Argentina. However, large economies such as Brazil, Mexico, Colombia, Peru and Chile have signs of stagnation. The projection by 2026, of 2.4%, reaffirms the condition of ALC as the least dynamic region globally.
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The data: Argentina, expected rebound
Argentina will have the greatest rebound in 2025, with 5.5%, after a contraction of -1.8% in 2024. This recovery is attributed to recent measures of macroeconomic stabilization. Even so, the country faces structural challenges such as fiscal deficit and chronic inflation that weakens purchasing power.
Brazil will grow 1.8% in 2025 after 3.4% in 2024. The country faces inflationary pressures, especially food and services, which led its central bank to stop the reduction of rates. The high public debt service and the weak recovery of private consumption limit their performance.
Mexico will not grow in 2025, after an expansion of 1.5% in 2024. The fall is due to the exhaustion of public investment and uncertainty about Nearshoring, affected by tariffs in the United States. Business caution grows, despite new agreements with the European Union, before a less favorable global context for new investments.
Colombia will grow 2.4% in 2025, after 1.7% in 2024. It has advanced in poverty reduction, but informality and low productivity persist. Peru and Chile will grow below 3%, facing tax adjustments, inflation and weakening of domestic demand. In Chile, in addition, the increase in the dollar and energy costs raise inflation.
The Caribbean shows a solid recovery in tourism, with San Vicente and Granada growing 4.9% and Dominica 4.3% in 2025. However, the dependence on the tourism sector requires investment in infrastructure and connectivity. In contrast, Haiti continues in crisis, with a contraction of -2.2% planned by 2025.
Deblation, inflation and monetary dilemmas
Regional public debt will reach 63.3% of GDP in 2024, above 59.4% in 2019. Interest payment already represents 10.9% of public spending in larger economies, limiting the margin for social investment. Inflation, although it has decreased since 2022, slows down due to international food wages and prices. Real interest rates remain high, and central banks face the dilemma of lowering them without generating capital leaks or excessive depreciation.
The low investment, combined with low productivity, slows long -term growth. Regional labor productivity represents between 20% and 60% of that of the countries of the Organization for Economic Cooperation and Development (OECD).
In addition, the adoption of technologies such as generative artificial intelligence (Genai) is limited. The report suggests active training and digital inclusion policies to take advantage of these tools in key sectors such as health and education.
The migratory return from the US presses labor markets and social systems. At the same time, the fall in international aid affects countries such as Haiti and environmental programs such as those of the Amazon. The World Bank emphasizes that China’s deceleration and the reduction of foreign assistance worsen the economic environment.
The World Bank concludes that Latin America and the Caribbean must boost structural reforms postponed by decades. Improving infrastructure, modernizing taxation, strengthening education and updating regulatory frameworks are essential steps to attract investment, generate quality employment and break with economic stagnation.
With EFE information
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