Regional Economic Outlook

Growth for most countries in the Latin America and the Caribbean continues to converge to its potential from different cyclical positions. Economic activity has been largely driven by consumption while investment remains sluggish. Growth is expected to moderate from 2.4% in 2024 to 2.0% in 2025, and medium-term growth remains subdued reflecting long-standing challenges. The disinflation process has slowed down significantly, as the decline in core goods and core services inflation came to a halt in the second half of 2024 amid rising import prices and currency depreciations. Against this backdrop, monetary policy decisions are becoming more heterogenous—some central banks are pivoting toward tightening or staying on hold. A timely fiscal consolidation to rebuild buffers remains crucial as the scope for monetary easing becomes more limited and the shifting global environment creates new challenges.