Latin America and Caribbean Economic Growth Outlook 2026

Latin America and the Caribbean face continued economic stagnation in 2026, with growth projected at just 2.1%, below the 2.4% recorded in 2025, according to the World Bank’s latest regional economic update released on April 8, 2026.

The subdued outlook reflects a challenging macroeconomic environment marked by high borrowing costs, weak external demand, and inflationary pressures stemming from geopolitical uncertainty, which together are dampening private investment and job creation across the region.

Consumer spending continues to support growth, but only modestly, while investment remains weak as firms hold back amid a difficult external environment characterized by persistently high global interest rates, slowing growth in advanced economies and China, and ongoing trade policy uncertainty.

Geopolitical tensions, including the conflict in the Middle East, have further complicated the economic landscape by pushing energy prices higher and introducing inflationary risks that could delay monetary easing, placing additional pressure on governments already operating under tight fiscal constraints.

Public debt ratios, though stabilized, remain high by historical standards, with elevated interest payments crowding out spending on infrastructure and social investment—areas deemed critical for long-term growth by the World Bank.

The report argues that with the right policies, the region can pivot to harness its natural resources, energy potential, and ongoing reform momentum to create quality jobs and foster more inclusive and productive growth.

“Latin America and the Caribbean have the assets—and the reform capacity—to achieve far more. The central ambition should be clear: create quality jobs that power growth and lift productivity,” said Susana Cordeiro Guerra, World Bank Vice President for Latin America and the Caribbean.

Restoring business confidence, unlocking private investment, and raising productivity are identified as essential steps to overcome the current stagnation and break free from the region’s long-standing pattern of low growth capacity.

ECLAC’s updated projections, released in October 2025, align closely with the World Bank’s assessment, estimating GDP growth of 2.4% for 2025 and 2.3% for 2026, reflecting a slightly less adverse international environment than previously anticipated but confirming the persistence of structural challenges.

The region continues to be mired in a trap of low growth capacity, with average rates hovering around 2%, characterized by scant investment, low productivity, sluggish labor markets, and high inequality levels, underscoring the need for a more accelerated productive transformation to fuel sustainable economic expansion and diversification.