In Charts: Can Latin America's Economies Weather Global Headwinds?

Economic growth in Latin America and the Caribbean still lags behind the global average, but the region remains resilient against current shocks, such as energy disruptions brought on by the war in Iran and its knock-on effects on food and fuel prices, says the IMF’s Regional Economic Outlook October Update. The Fund says “strong U.S. demand, high commodity prices, supportive financial conditions, and robust tourism and remittances” have helped the region cushion adverse pressures, including tariffs and trade unpredictability. The World Bank’s update offers similar optimism regarding Latin America’s export sector and the impact of new trade agreements, but cautions that “a combination of external and domestic policy uncertainty counterbalances these upside opportunities.”

In both updates, 2026 global and regional growth projections held steady from April to October. But, while the 2027 worldwide forecast improved slightly from a 3.2 percent to 3.4 percent expansion, the Latin America and the Caribbean average slipped from 2.7 percent to 2.5 percent.

The region’s two largest economies, Brazil and Mexico, are both projected to see modest growth. In Brazil, the financial institutions point out that economic gains from the country’s net energy-exporting status are offset by “tight” monetary conditions, such as high interest rates, which disincentivize private consumption and investment. For Mexico, which has benefited from increasing electronic sales, the IMF says, “uncertainty regarding domestic policies will weigh on corporate investment.” In the meantime, Brazil and Mexico have increased their exports to China, by almost 6 and 8 percent, respectively.

In South America, the high prices of mineral and energy commodities have boosted economic activity. But as El Niño ramps up, the IMF warns that strong weather events threaten to drive up inflation and depress near-term growth in Colombia, Ecuador, and Peru.