UN Predicts Modest Growth for Latin America and the Caribbean in 2025

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) has projected a 2.4% economic growth rate for the region in 2025, citing domestic consumption as the primary driver. This updated forecast marks a slight increase from the 2.3% estimate made in August, although ECLAC described the region’s growth trajectory as remaining subdued.

Private Consumption and Economic Drivers

ECLAC’s report emphasized that private consumption would continue to play a central role in fueling growth, mirroring trends seen in 2024 but with more moderate expansion expected. The agency also revised its growth estimate for 2024 to 2.2%, up from its earlier forecast of 1.8%.

Employment across the region is predicted to grow modestly in 2025. However, labor force participation rates remain weaker than pre-pandemic levels, and persistent gender inequalities continue to pose challenges.

Risks and Economic Headwinds

The report cautioned that intensifying geopolitical and trade tensions could pose significant risks to the region’s economies. Such developments might disrupt raw material prices, shipping routes, and transport logistics, adding uncertainty to growth prospects.

ECLAC highlighted concerns about gross fixed capital formation, noting that it is expected to contract further. This decline in investment raises doubts about the region’s ability to sustain medium- and long-term economic growth. Meanwhile, public spending remains weak, compounding the investment challenges.

Country-Specific Projections

ECLAC forecasted economic growth rates for the region’s largest economies, including:

• Brazil: Expected to grow by 2.3%
• Mexico: Predicted growth of 1.2%
• Argentina: Projected to achieve 4.3% growth

Inflation and Monetary Policy Trends

Inflation across the region has continued to trend downward, providing opportunities for central banks to cautiously reduce interest rates. ECLAC noted that monetary easing in the United States has contributed to this shift, enabling rate-setters in the region to adopt a “heterogeneous and cautious” approach to policy adjustments.

Trade Outlook for 2025

The report offered a more optimistic view of trade, predicting that exports and imports of goods and services would recover in 2025 compared to the previous year. While growth prospects remain constrained by global uncertainties, the recovery in trade is expected to provide some support to the region’s economies.

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