Regional Economic Outlook

The Latin America and the Caribbean region has shown remarkable resilience in the face of recent global challenges, rebounding more strongly than expected from the pandemic. Growth is now moderating, from 2.3% in 2023 to 2.0% in 2024, as most economies are operating at potential. This moderation is also due to a weaker external environment and the ongoing impact of tight policies aimed at curbing inflation. Inflation is on a downtrend, thanks to prompt measures by the region's central banks and global disinflation trends. With inflationary pressures subsiding, monetary policy easing can continue, striking a balance between durably bringing inflation back to target and avoiding an undue economic contraction. Fiscal policy should focus on expediting consolidation efforts to rebuild policy space by mobilizing revenue while safeguarding essential social expenditures to uphold social cohesion.

With poverty and inequality still high in the region, it is imperative to boost potential growth—which averages about 2.5%, lagging behind peer economies,. Structural reforms to raise growth should focus on enhancing the rule of law, improving the business environment, boosting labor force participation—especially of women—and addressing informality. Tackling crime and violence can also deliver substantial social and economic gains.