ECLAC warns that the global and regional panorama by 2025 and 2026 is subject to high uncertainty and that the dynamics of growth of the region’s economies could deteriorate because of an increase in global risks
The low growth period will continue in Latin America and the Caribbean this year due, in large part, to a weak internal demand characterized by the deceleration of private consumption and the unfavorable international environment, according to forecasts of the Economic Commission for Latin America and the Caribbean (ECLAC), an economic entity of the UN for the region.
ECLAC pointed out on Tuesday, August 5 that the regional macroeconomic scenario for 2025-2026 will be marked by a lower dynamism of internal aggregate demand and a limited external impulse, resulting in a growth of just 2.2% in 2025 and 2.3% in 2026.
In its annual report, ECLAC warns that the global and regional landscape by 2025 and 2026 is subject to high uncertainty and that the growth dynamics of the region’s economies could deteriorate because of an increase in global risks.
The study specifies that the performance of the economies of the region is in line with the moderation of world economic growth due to geoeconomic tensions and fragmentation, restrictive financial conditions, the weakening of international trade and war conflicts, among other factors.
In addition, external vulnerability has been accentuated and reflected in the projected increase in the current account deficit and in the greatest dependence of external capital, the report points out, detailing that for the 2025-2026 biennium, the balance of payments in the region will continue to be impacted by different risks, such as the aggravation of geopolitical conflicts, the volatility of the prices of the prices of the products synchronized of the main economies of the world.
ECLAC also calculates less employment growth and greater unemployment than in previous years, reaching 5.6%,
Regional inflation, meanwhile, would remain stable, although with risks of upward pressures.
Countries that will grow in South America
According to the report, in South America an expansion of 2.7 % in 2025 is expected, above the regional average. In Latin America, some countries will have an economic recovery with respect to last year:
- Argentina will grow between five and four percent in 2025 and 2026, after having 1.3 % in 2024.
- Ecuador will grow 1.5 % and 2.1 % in 2025 and 2026, while in 2024 it experienced a decrease with -2.0.
- Colombia will experience an economic rebound of 2.5 and 2.7 % in 2025-2026, instead of 1.6 % in 2024.
- Paraguay shows a “solid expansion” by maintaining a four percent rate in its GDP.
Nations that will face a decline
ECLAC warns that several countries in the subregion will have a slowdown in their economies with respect to 2024. This is the case of Brazil, Chile, Venezuela, Bolivia, Peru and Uruguay.
- Brazil goes from 3.4 % in 2024 to 2.3 and 2.0 % this year and next.
- Chile drops from 2.6% to 2.4% and 2.2% in 2025 and 2026, respectively.
- Venezuela goes from 6.2% in 2024 to the decrease of two percent estimated for 2025 and 2026.
- Bolivia, Peru and Uruguay also lose tenth percentage in their GDP every year.
The report indicates that South America, as a whole, will average 2.4% growth in 2026, the same figure as in 2024.
*Also read: Maduro says that the economy grew 7.71% in the first half of this year
Growths and setbacks in Central America
The ECLAC report reflects a percentage growth in Central and Mexico by 2025. “Almost half of the expansion of 1.8 % recorded in 2024, because of the weakening of external demand, especially from the United States.”
Mexico, the second Latin American economy, after Brazil, goes back to the lean growth of 0.3 % (1.4 % in 2024) and will reach one percent in 2026. Cuba and Haiti (encompassed in this subregion) have negative growth.
Countries such as Guatemala, Panama and the Dominican Republic will show, however, a more dynamic performance, with rates greater than 3.5 %, thanks to the thrust of the services sector, private consumption and remittances.
By 2026, a slight recovery of the subregion is anticipated, to 1.7 %, although it will remain highly vulnerable to external shocks due to its structural dependence on the US economy in commercial, financial and migratory spheres.
In the Caribbean (excluding Guyana), a growth of 1.8 % is projected in 2025 and 1.7 % in 2026, a deceleration with respect to 2024, which is explained by the lowest GDP growth of the United States, and the consequent reduction of the demand for tourist services, in addition to the lower global demand for services.
The subregion continues to face high costs of import and transport, as well as marked exposure to natural disasters, factors that affect its external position and level of indebtedness.
In contrast, Guyana, the scene of an oil bum, would maintain high growth rates (10% this year, 43% next), thanks to the continuity of investments in the hydrocarbons sector.
With UNP/IPS information
*Journalism in Venezuela is exercised in a hostile environment for the press with dozens of legal instruments arranged for the punishment of the word, especially the laws “against hatred”, “against fascism” and “against blockade.” This content was written taking into consideration the threats and limits that, consequently, have been imposed on the dissemination of information from within the country.
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