Economic Forecast for Latin America and the Caribbean

SANTIAGO (Reuters) – Economies in Latin America and the Caribbean are expected to grow by 2.4% in 2025, driven by domestic consumption but tempered by risks from worsening global geopolitical and trade tensions, according to the United Nations released on Wednesday.

The UN's Economic Commission for Latin America and the Caribbean (ECLAC) raised its projection from 2.3% in August, yet warned that the region would maintain a "low growth trajectory."

The report highlighted that private consumption would be the main driver for growth in the region, similar to 2024, but with "more moderate expansion."

ECLAC also revised its regional growth forecast for 2023 to 2.2%, an increase from 1.8% in August.

Employment is expected to continue to grow slightly in 2025, despite a weak labor force participation rate compared to pre-pandemic levels and persistent gender inequality.

The agency identified the main risks to the region's economies as intensifying geopolitical and trade tensions that could affect raw material prices, complicating shipping routes and transport logistics.

ECLAC projects that the gross domestic product (GDP) in Latin America’s largest economy, Brazil, would grow by 2.3% in 2025; Mexico's by 1.2%; and Argentina’s is seen growing by 4.3%.

Countries in Latin America and the Caribbean are on a downward trend in inflation, which, along with monetary easing in the United States, has allowed rate-setters to reduce interest rates in a "heterogeneous and cautious" manner.

ECLAC emphasized that the outlook for investment in upcoming years remains discouraging amid weak public spending.

"Gross fixed capital formation is expected to continue to contract, which raises concerns about its role in sustaining medium- and long-term growth in the region's economies," the report stated.

Conversely, exports and imports of goods and services are expected to recover in 2025 compared to 2024.