Latin America begins 2025 with the expectation of continuing the decline in inflation, although at a slower rate than that observed in 2024, and with the challenges and uncertainty posed by the arrival of Donald Trump to the White House.
According to the latest report from the Economic Commission for Latin America and the Caribbean (ECLAC), the Latin American growth rate projected for 2024 is 2.2%, while that of 2025 is 2.4%.
The same organization indicates that inflation in the region has shown a downward trend, which is why it estimates that the total for 2024 would be reduced to 3.4%.
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However, the challenges of Latin America, which closed 2024 with a disparity between the countries that registered high inflation rates, those that did not manage to meet their projections and those that achieved better “control” of price variations, will be permeated due to the economic policies of Trump, who will be sworn in for a new term on January 20.
The uncertainty over Trump
The president-elect of the United States has promised a reduction in taxes and has threatened to impose stronger tariffs, which could lead to a “deficit” and pose a “risk” to exchange rate markets, according to Alejandro Espitia , professor of Development and Macroeconomics at the Colombian Javeriana University.
For Espitia, it would be “almost impossible” to achieve a balance between the increase in spending proposed by Trump, the reduction in taxes, his intention to “weaken the dollar” and the increase in tariffs on his trading partners. This “cocktail of measures” generates “great uncertainty and would have brutal effects on the growth” of the economy, he says.
“We have to see what happens. Surely (with all these measures) the Federal Reserve (Fed) will have to raise interest rates,” predicts the expert, who maintains that the “contradiction in the decisions” that Trump makes will “terribly” affect the markets of the region. During his first term (2017-2021), the Republican was a “little stuck,” says Espitia, in reference to the “obstacles” that were placed on him even from his own party.
But, for his next government, “the Republicans need Trump more than Trump needs the Republicans,” so “surely he will be able to do many things (that he proposes).” The countries with the best “control” of their inflation
Among the inflation results in the region, Argentina stands out, whose consumer price index (CPI) stood at 117.8% year-on-year, the eighth consecutive deceleration in the Government of Javier Milei. In the case of Venezuela, inflation was 48% in 2024, according to preliminary figures announced by Nicolás Maduro, inaugurated on January 10 as president for a third six-year term.
Despite this figure, the independent entity Venezuelan Finance Observatory (OVF) reported that inflation closed at 85%, a reduction of 108 points compared to 2023, when it ended at 193%. Nicaragua, for its part, had an inflation of 2.84%, 2.76 points less compared to 2023.
For its part, Ecuador closed the year with 0.53%, about 0.83 percentage points below 2023 and the lowest record since 2021. And Colombia reported inflation of 5.2%, -4.08 points compared to 2023, when it stood at 9.28%.
Mexico’s inflation rate, meanwhile, also fell to 4.21%, its lowest level in almost four years. Those who moved away from the projected goals The US CPI rose two tenths in December to 2.9%, closing 2024 far from the 2% objective and with a rebound that complicates the pace of lowering interest rates that has begun in September by the Fed.
The Dominican Republic registered inflation of 3.35%, the lowest in the last six years and slightly lower than that of 2023 (3.57%).
Brazil, for its part, stood at 4.83%, above the ceiling of the goal set by the Central Bank (4.5%) and higher than the figure for 2023 (4.62%). Costa Rica reached 0.84%, outside the target range established by the Central Bank, between 2% and 4%, which is happening for the third consecutive year. In 2023 it recorded a deflation of -1.77%. Bolivia closed with an accumulated inflation of 9.97%, the highest since 2008 (11.8%).
In Chile, the CPI had a rate of 4.5%, below the Central Bank’s estimates, after ending 2023 at 3.9%. Challenges and expectations for 2025 After knowing the inflation figures in the different Latin American countries, expectations today focus on Trump’s actions, which, for Celso Melo, professor of Economics and Finance at the Jorge Tadeo Lozano University, will lean towards the “protectionism”.
This expert agrees with Espitia when considering the “degree of uncertainty” generated by Trump’s inauguration and the “tensions” that – he assures – his “abuse in increasing protectionist measures” could generate.
The United States will bet on strengthening its own economy, controlling inflation and accommodating employment,” analyzes Melo, who adds that the new Government “will seek to recover the lost territories within the dynamics of international trade.”
Thus, beyond the “fiscal adjustments” that Latin America implements, the outlook for 2025 will also depend on the “social and political order” of the region, warns Melo, as they are dynamics that “will influence” the measures that Trump takes. .
For this reason, and regarding the trade war that the Americans are waging with China, Melo suggests that the conditions of the Free Trade Agreements be renegotiated or improved, which would be a “win-win” for both the US and Latin America. , “natural partner” of what “continues to be” the most important economic power in the world
