The World Bank has published its latest Latin America and the Caribbean Economic Update, forecasting regional growth of 2.1% in 2026, down from 2.4% in 2025, with growth projected at 2.4% in 2027. The report links the weaker outlook to high borrowing costs, weak external demand, and inflationary pressures tied to geopolitical uncertainty that are weighing on private investment and job creation. Consumer spending is expected to continue supporting activity only modestly, while firms hold back investment amid expectations that global interest rates will remain high, slowing growth in advanced economies and China, and uncertainty around trade policy. Geopolitical tensions, including conflict in the Middle East, are cited as pushing energy prices higher and adding inflation risks that could delay monetary easing, while high interest payments and still-elevated public debt levels constrain fiscal space and crowd out infrastructure and social spending. To raise productivity and support “industrial or productivity” strategies, the report points to four priorities: closing skills gaps; expanding access to finance and strengthening insolvency frameworks; deepening trade integration; and building institutional capacity to design and adapt policies.
World Bank 2026-04-08
World Bank projects Latin America and the Caribbean growth to slow to 2.1% in 2026 and calls for reforms to unlock investment and job creation
The World Bank’s latest Latin America and the Caribbean Economic Update projects regional growth of 2.4% in 2025, 2.1% in 2026 and 2.4% in 2027, amid high borrowing costs, weak external demand and geopolitical uncertainty. The report says modest consumer spending, subdued investment, elevated public debt and higher energy prices are constraining growth and fiscal space, and identifies four priorities to raise productivity: closing skills gaps, expanding access to finance, strengthening insolvency frameworks, deepening trade integration, and building institutional capacity.