Regional GDP expected to expand only slightly in 2025

Latin American and Caribbean GDP is expected to grow 2.4% in 2025 after expanding 2.2% this year.

According to a report by the UN’s Economic Commission for Latin America and the Caribbean (Eclac), South America’s economy will grow 2.6% this year, Central America 2.9% and the Caribbean, excluding Guyana, 2.6%.

"Although we're talking about the same region, there are different explanations for the economic performance of each country," Luis Octavio Leal, chief economist at asset management firm G5 Partners, told BNamericas.

"Brazil, for example, will experience economic slowdown due to domestic issues, while other countries, such as Mexico, Chile and Peru, are more likely to face impacts associated with international factors, such as the election of Donald Trump in the United States," he said.

Brazil’s GDP is expected to expand 3.2% this year and 2.3% in 2025.

"In Brazil, following a lowering of the benchmark [interest] rate from 13.75% in mid-2023 to 10.50% in May 2024, authorities began raising the rate once again in September owing to mounting inflationary pressure due partly to the fiscal stimulus," the report reads.

Mexico’s economy is projected to grow 1.4% this year and 1.2% next year, Chile’s 2.3% and 2.2%, and Peru’s 2.7% and 3.1%, respectively.

"If Trump enforces his threats of trade barriers, higher tariffs, countries that are more sensitive to exports and commodity prices, such as Chile and Peru, will be more affected. In the case of Mexico, in addition to the tariff issue, there is also a strained relationship that could escalate, related to immigration," added Leal. 

Colombia’s economy is projected to grow 1.8% in 2024 and 2.6% next year.

Argentina, where President Javier Milei is implementing economic reforms to attract private investors, growth is expected to reach 4.3% in 2025, reversing a contraction of 3.2% forecast for this year.

"Argentina has the potential to become the darling of international investors in the coming years, due to the closeness between its president, Javier Milei, and Trump. However, for this to materialize, Argentina needs to re-establish its international financing lines to fund its debt," said Leal.

According to Eclac, the region’s average annual growth of 1% between 2015 and 2024 indicates that GDP per capita has stagnated during the period.

“To tackle the trap of low capacity for growth, it is necessary to increase the ability of economies to mobilize financial resources effectively, with the aim of strengthening resilience in the face of economic fluctuations, while also strengthening productive capacity in the medium and long term, by adopting productive development policies geared towards increasing productivity, fostering investment in productive capital and creating quality employment,” Eclac executive secretary José Manuel Salazar-Xirinachs was quoted as saying in a statement from the organization.