Latin America's 2025 growth forecast rises slightly
Aug. 6 (UPI) -- The Economic Commission for Latin America and the Caribbean, or ECLAC, has raised its 2025 regional growth forecast to 2.2%, up from the 2.0% estimate issued in April.
The slight increase is due to improved economic performance in the first quarter of the year, although the agency warns the region remains stuck in a prolonged period of low growth.
In its updated outlook released Tuesday, ECLAC projects Latin America's GDP will grow by 2.3% in 2026. However, the agency cautioned that growth prospects vary significantly across countries and subregions.
South America is projected to lead regional growth in 2025, with gross domestic product expanding 2.7%, driven by recoveries in Argentina and Ecuador, faster growth in Colombia and strong performance in Paraguay. Still, other South American economies are expected to slow compared to 2024.
In contrast, Central America and Mexico are forecast to grow just 1.0% in 2025, down from 1.8% the previous year, due largely to weakening external demand -- particularly from the United States.
Even so, Guatemala, Panama and the Dominican Republic are expected to maintain growth above 3.5%, supported by a strong services sector and rising remittances.
In the Caribbean, excluding Guyana, growth is projected at 1.8% in 2025 and 1.7% in 2026. The region continues to struggle with declining tourism, high energy and transport costs, and heightened vulnerability to natural disasters.
In contrast, Guyana is expected to maintain strong growth, fueled by continued investment in the oil and gas sector.
Globally, ECLAC anticipates an adverse economic environment marked by geopolitical tensions, economic fragmentation, restrictive financial conditions and slowing global trade. Rising current account deficits and increased reliance on external capital are adding to Latin America's vulnerability.
The report also projects a slowdown in job creation. Although the regional unemployment rate is expected to hold steady at about 5.6%, the pace of job growth is likely to weaken, while informality and gender gaps in the labor market persist.
Inflation is forecast to remain stable at around 3% in 2025 and 2026, though the report warns that risks of renewed upward pressure remain.
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