Washington: The World Bank published on April 8, 2026, its economic update for Latin America and the Caribbean, projecting growth of 2.1% for the region in 2026, below the 2.4% recorded in 2025. The report warns that geopolitical uncertainty, high financing costs, and weak private investment are the main factors limiting regional economic dynamism.

According to the report, domestic consumption continues to be the main growth driver, though in a moderate way. Private investment remains weak because companies maintain a cautious stance given the adverse external environment, which includes elevated global interest rates, slowdown of advanced economies, and trade tensions stemming from US tariff policies.

Risk Factors

The report identifies several risk factors that could worsen the outlook. The closure of the Strait of Hormuz in March 2026 triggered by the conflict in the Middle East pushed oil prices above 120 dollars per barrel, which benefits net exporters like Brazil, Colombia, and Argentina, but generates inflationary pressures in net importers like Chile and Mexico.

Public debt remains at historically high levels in several countries, with interest payments absorbing resources that should be directed to infrastructure and social spending. The World Bank warns that fiscal space is limited to respond to possible external shocks.

Policy Recommendations

To improve the outlook, the organization recommended closing skills gaps through education and technical training, expanding access to financing for businesses, deepening trade integration, and strengthening regulatory institutions. William Maloney, World Bank chief economist for the region, stressed that the central ambition must be to create quality jobs that drive productivity and inclusion. The growth projection for 2027 is 2.4%, conditional on a more stable external environment.