Economic Outlook for Latin America and the Caribbean
The Comisión Económica para América Latina y el Caribe (Cepal), a United Nations body, has revised its growth projections for Latin America and the Caribbean. The region is expected to grow by 2.4% in 2025 and 2.3% in the following year, amidst weak domestic demand and global uncertainty.
Adjustments to Individual Country Projections
While Cepal maintained its overall regional performance projections for both years, it adjusted calculations for certain countries. Some nations experienced increased exports of goods and services, while others faced pressure on trade terms and higher commercial volatility.
- Brazil’s GDP growth projection was kept at 2.5%
- Mexico’s growth outlook was cut to 0.4% from 0.6% due to weakened domestic demand, resulting from lower remittances and decreased private consumption and investment.
- Argentina’s projection remained at 4.3%
- Peru’s projection was maintained at 3.2%
- Colombia’s projection was increased to 2.6% from 2.5%
- Chile’s projection was reduced to 2.5% from 2.6%
Labor Market and Informality
Cepal noted that labor markets continue to recover, albeit at a slower pace. Employment growth remains moderate, with persistent gaps in labor force participation and unemployment rates among men and women. High informality levels in most countries restrict consumption growth.
Sectoral Performance
The region’s economy remains heavily reliant on the services sector, which accounts for a significant portion of value added and continues to lead job creation and post-pandemic recovery.
Subregionally, both South America and Central America have shown a slowdown in economic growth since the second half of 2022, with growth rates converging around 2.5% and 3%, respectively.
Inflation Trends
Cepal highlighted that inflation has continued to decline throughout 2025 in the region, solidifying the process initiated in 2024.
Key Questions and Answers
- What is Cepal? Cepal, or the Comisión Económica para América Latina y el Caribe, is a United Nations economic commission for the region.
- Why did Cepal adjust its growth projections for some countries? The adjustments were made due to varying factors such as increased exports, pressure on trade terms, and commercial volatility in individual countries.
- What is the current state of labor markets in Latin America? Labor markets are recovering, but at a slower pace. Moderate employment growth persists alongside gaps in labor force participation and unemployment rates, with high informality levels restricting consumption growth.
- Which sectors are driving economic recovery in Latin America? The services sector is the primary driver of value added, job creation, and post-pandemic recovery in Latin America.
- What are the recent inflation trends in Latin America? Inflation has been declining throughout 2025 in the region, solidifying a process initiated in 2024.
