Regional Economic Outlook for the Western Hemisphere, April 2026

October 2021 Regional Economic Outlook for Western Hemisphere - Cover

The Western Hemisphere entered 2026 in sound footing: growth was close to potential, output gaps had mostly closed, and inflation was at, or converging toward, target in most countries. However, the outbreak of the war in the Middle East will have effects in the region, albeit unequal among countries. Large oil producers are benefiting from high energy prices, while energy commodity and food importers—particularly those with high public debt, low international reserves, or reliance on external financing—face unambiguously negative economic impacts. Efforts to strengthen monetary policy frameworks in the past should help contain inflationary pressures. For most countries, there is limited fiscal policy space to respond to the shock, and difficult trade-offs will be faced, including reducing outlays in other areas or increasing revenues from those that can afford it. Political pressures to contain fuel and food price increases should be resisted. Instead, support to the vulnerable should be strategically deployed.