Key facts
- IMF trimmed growth forecasts for Latin America and the Caribbean.
- Regional growth forecast for this year cut to 2.3% from 2.4%.
- Regional growth forecast for 2025 cut to 2.5% from 2.7%.
- Global growth forecast nudged up to 3.1% from 3.0% for this year.
- Argentina's growth forecast for this year cut to 2.1% from 3.5%.
- Mexico's 2026 growth forecast raised to 1.5% from 1.2%.
The International Monetary Fund has reduced its economic growth projections for Latin America and the Caribbean for both this year and next, citing the ongoing energy shock stemming from the Middle East war and a lack of significant uplift from the artificial intelligence boom in most of the region. The IMF's World Economic Outlook, released early Tuesday in Bangkok, now forecasts regional growth at 2.3% for the current year, a decrease from its July estimate of 2.4%. The forecast for 2025 was also trimmed to 2.5% from 2.7%.
These downward revisions for the region contrast with an upward revision for global growth, which the IMF increased to 3.1% for this year from 3.0%, attributing this resilience to rerouted energy supplies and AI-driven investments. The Middle East conflict has created a global inflation shock, with Brent crude prices approximately 45% higher than pre-war levels, leading to increased fuel and power costs that are impacting households and businesses. This has contributed to borrowing costs reaching multi-decade highs globally.
For Latin America, the IMF noted that the impact of the energy shock varies depending on whether commodity exporter gains outweigh importer losses and the credibility of central banks' inflation targets. The report explicitly stated that "there is little offset from the technology upturn in most countries."
Among specific economies, Argentina experienced the most significant cut to its output estimate, with growth now expected to slow to 2.1% this year, down from a previous forecast of 3.5% and compared to 4.5% in 2025. Brazil's forecasts were also lowered to 2.2% for this year and 1.9% for 2027, with the IMF citing restrictive monetary policy, reduced fiscal support, and global uncertainty. Conversely, Mexico's 2026 forecast was raised to 1.5% from 1.2%, with the IMF pointing to exports, including those related to AI supply chains, and stabilizing investment as growth quickens. However, Mexico's 2027 forecast was slightly trimmed to 1.8% from 1.9% due to trade and other uncertainties.
Other country-specific data included in the report's tables show Chile's growth slowing to 0.6% this year from 2.5%, Bolivia's economy contracting by 3.0% after a 1.6% contraction in 2025, and Venezuelan inflation accelerating to 467.9% from 252.0%. The IMF warned that risks remain tilted to the downside, with potential market turmoil in emerging economies due to higher government borrowing costs, currency pressures, and tighter local financial conditions.