ECLAC raises 2025 growth forecast for Latin America amid challenges

On August 6, 2025, the Economic Commission for Latin America and the Caribbean (ECLAC) announced an increase in its regional growth forecast for 2025. The growth was revised to 2.2%, up from an earlier estimate of 2.0% made in April. This adjustment reflects a more favorable economic performance during the first quarter of the year. Despite the upward revision, ECLAC highlighted that the region continues to face a prolonged period of low growth, emphasizing the varying growth prospects across different countries and subregions. In South America, the economic outlook shines more positively, with predictions indicating a growth of 2.7% in 2025, driven primarily by recoveries in Argentina and Ecuador, enhanced growth in Colombia, and robust performance in Paraguay. However, other economies in South America may experience a slowdown compared to their growth rates in 2024, presenting a mixed picture for regional recovery. Conversely, Central America and Mexico's growth prospects are less favorable, with an anticipated decline to only 1.0% in 2025, down from 1.8% the previous year. This downturn is largely attributed to weakening external demand, especially from the United States. Within Central America, however, some countries are expected to outperform, such as Guatemala, Panama, and the Dominican Republic, which should maintain growth rates exceeding 3.5% thanks to strong performance in the services sector and increasing remittances. On the other hand, the Caribbean region, excluding Guyana, is expected to see modest growth projections of 1.8% for 2025 and a slight decline to 1.7% in 2026. Factors that hinder growth in this region include declining tourism, high energy and transport costs, and increased vulnerability to natural disasters. In contrast, Guyana stands out with strong growth forecasts, primarily fueled by substantial investment in its oil and gas industry. On a global scale, ECLAC predicts a challenging economic environment characterized by geopolitical tensions, economic fragmentation, restrictive financial conditions, and a decline in global trade. Risk factors such as rising current account deficits and a greater dependency on external capital exacerbate the vulnerabilities faced by Latin America. Additionally, the report anticipates a slowdown in job creation efforts. While the regional unemployment rate is projected to hold steady at around 5.6%, the growth rate of job opportunities is expected to weaken. The persistent issues of informality in the job market and gender gaps remain critical concerns. Inflation rates are predicted to remain stable at approximately 3% for both 2025 and 2026, although there are warnings of potential upward pressure.