World Bank warns of slower growth across Latin America

The World Bank on Thursday revised down its 2026 growth forecast for Latin America and the Caribbean to 2.2 percent in 2026, citing the weakening global economy amid energy-related uncertainty.

The report explained that the figure reflects “still weak domestic demand and reduced momentum in the global economy.” 

The region is expected to strengthen gradually again in 2027 (2.5 percent) and 2028 (2.8 percent), “as monetary policy is eased and global conditions improve,” according to the institution’s experts.

“Investment is expected to be a key driver of the medium-term recovery, accelerating during 2027-28 as monetary easing gathers pace,” they added.

Against this backdrop of relative sluggishness, Argentina stands out, with growth of 3.6 percent over the 2026–28 period, “driven by exports, but constrained by restrictive domestic monetary and fiscal policies.”

Brazil is expected to grow by 1.9 percent this year, while Colombia is forecast to expand by 2.3 percent, supported by their status as oil exporters.

Mexico has also remained relatively insulated from the energy price crisis, but uncertainty surrounding negotiations over its free trade agreement with the United States and Canada is weighing on the outlook, and the country is expected to grow by only 1.3 percent this year.

“The rise in oil prices will increase import costs and intensify inflationary pressures in net energy-importing countries. However, economies such as Chile and Peru will benefit in part from elevated metals prices,” the report noted.

Central America and the Caribbean, sub-regions that import more energy than they export, remain exposed to external volatility. Only remittances and relatively stable domestic demand are sustaining growth.

“Labour market challenges persist across the region, reflecting weak formal job creation, high levels of informality and modest income growth, which continue to affect productivity, consumption and poverty reduction,” the World Bank concluded.

– TIMES/AFP