Latin American Economy to Slow to 2.2% in 2026

The economy of Latin America and the Caribbean is expected to grow by 2.2% this year, a tenth of a percentage point less than the forecast from last October and below the average for emerging economies, according to an outlook report released by the International Monetary Fund (IMF) on Monday, January 19. The figure shows a decline from the already low growth of 2.4% in 2024 and 2025, although the IMF expects a rebound to 2.7% in 2027. The Fund has attributed the weak regional growth to low productivity and limited investment amid more restrictive financial conditions, compounded by the impact of the slowdown in world trade. It also influences the region's reduced ability to benefit from the boom in technology investment, which drives growth in advanced economies. Its assessments are close to those of the United Nations Department of Economic and Social Affairs (DESA), according to which the region will see a slight reduction in growth, from 2.4% in 2025 to 2.3% in 2026, before rebounding to 2.5% in 2027. They also align with the Economic Commission for Latin America and the Caribbean (ECLAC), which states that the region closed 2025 with a growth of 2.4% and will continue with low figures of 2.3% in 2026 for the fourth consecutive year. In its update on Monday, the Fund provided national estimates for the region only for Argentina, Brazil, and Mexico. Argentina received the best ratings, as after contracting by 1.3% in 2024, it grew by 4.5% last year and will maintain a pace of four percent in 2026 and 2027. Brazil will slow to 1.6% in 2026 after advancing by 3.4% and 2.5% in the two preceding years, although it would recover again (2.3%) in 2027. The lower dynamism would be due to tougher internal financial conditions, some moderation in consumption, and a less expansive fiscal policy. Internal political or geopolitical tensions could arise, introducing new sources of uncertainty and disrupting the world economy. The Fund believes that a sustained easing of trade tensions will contribute to growth and recommends restoring fiscal maneuvering room, preserving financial and price stability, reducing uncertainty, and implementing structural reforms without further delay in the various economies. Among emerging and developing economies, India stands out with an estimated growth of 6.4% in 2026, and China and Saudi Arabia with 4.5%. It notes that the 'headwinds from changes in trade policies' are being countered by 'tailwinds' from increased technology-related investment, particularly in artificial intelligence (AI), more noticeable in North America and Asia than in other regions. It adds fiscal and monetary support, generally accommodative financial conditions, and the adaptability of the private sector. It projects that the global general level of inflation will fall from the estimated 4.1% in 2025 to 3.8% in 2026 and 3.4% in 2027. Among the Fund's concerns is that expectations of an increase in productivity related to AI could lead to a decline in investment and trigger a sharp correction in the financial market, which would spread from the AI sector to other segments and erode household wealth. Trade tensions could escalate, prolonging uncertainty and further dampening activity.