The economic outlook for Latin America and the Caribbean will strengthen in 2025 supported by more robust household spending and the easing of monetary policies; However, the region faces important Downside risks, such as domestic political uncertainties and weaker-than-expected external demandaccording to the UN economic outlook for this year.
The report, published this Thursday, projects that the Global growth will remain at 2.8% in 2025unchanged from 2024.
“Although the global economy has demonstrated its resilience, withstanding a series of mutually reinforcing shocks, growth remains below the pre-pandemic average of 3.2%, limited by the investment weakness, the slow growth of productivity and high debt levels”, notes the document.
The study notes that lower inflation and ongoing monetary easing in many economies could provide a modest boost to global economic activity in 2025, but clarifies that uncertainty remains high given the risks arising from geopolitical conflicts, increased trade tensions and high borrowing costs in many parts of the world.
“These challenges are particularly serious for low-income countries and vulnerable, where insufficient and fragile growth threatens to further undermine progress towards the Sustainable Development Goals,” the document highlights.
Of Latin America and the Caribbean, says the short-term outlook is moderately favorable, with gross domestic product (GDP) growth estimated at 2.5%, higher than 1.9% in 2024.
The report attributes the boost to the improvement in private consumption, relaxation of monetary policiesthe resistance of capital flows and the greater growth of exports. However, the text clarifies, “these prospects present significant downside risks.”
Internal and external risks
Among these risks, it stands out, in the external front, a sharper than expected slowdown in China and the United Stateswhich would negatively affect exports, remittances and capital flows.
in front internal, mentions political uncertainty which could undermine business and investment confidence, in addition to climate-related shocks, particularly in the Caribbean, which could test fiscal policies and disrupt agricultural production, causing food inflation.
In Brazil, the region’s largest economy, growth is expected to slow from 3.0% in 2024 to 2.3% in 2025, a slowdown that reflects headwinds resulting from tighter monetary policy, reduced fiscal spending and weakening exports.
In Mexicothe second regional driver, GDP growth is expected to remain sluggish. Following an estimated 1.6% expansion in 2024, it is forecast to grow 1.3% in 2025, limited by weakness in private consumption and fiscal consolidation efforts.
In Argentinathe economy is recovering after two years of contraction, driven by a revival of private consumption and strong growth in investment.
In the Dominican Republic, Guyana and ParaguayGDP growth is projected to remain above 3.5% in 2025.
In it Caribbean (excluding Guyana), growth is estimated at 2.5% for 2024 and is expected to remain unchanged in 2025, as the effects of the post-pandemic tourism rebound fade. Although GDP growth is significantly higher than the 0.5% average recorded between 2010 and 2019, it is still insufficient to improve living conditions.
Although the regional outlook is favorable, economic growth has remained sluggish for more than a decade and the GDP per capita remains stagnant at the same level as ten years ago.
Critical minerals and economic growth
To improve labor market outcomes, raise living standards and move towards the Sustainable Development Goals, it is crucial accelerate economic growth, the report emphasizes, and argues that minerals critical to the energy transition – such as lithium, cobalt and rare earth elements -, could propel that acceleration in many Latin American countries.
“For resource-rich developing countries, including several in Latin America and the Caribbean, increasing global demand for essential minerals represents a unique opportunity to boost growth, create jobs and increase public income to invest in sustainable development,” the publication maintains.
However, he warns that these opportunities carry significant risks, including poor governanceunsafe labor practices, environmental degradation and over-reliance on volatile commodity markets, which could exacerbate inequalities and damage ecosystems, undermining long-term development gains.
To minimize these risks, the report urges the governments of countries with these resources to adopt forward-thinking policies and comprehensive regulatory frameworks for sustainable extraction and equitable distribution of benefits.
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