IDB Predicts Economic Growth of 2.3% in Latin America and the Caribbean

  • Economic growth in Latin America and the Caribbean has returned to more stable historical averages since the coronavirus (COVID-19) pandemic, according to a new report issued by the Inter-American Development Bank (IDB).
  • According to the IDB's new macroeconomic report, the region grew 2.0% in 2024, exceeding initial forecasts of 1.7%, and is expected to grow 2.3% in 2025. The Regional Opportunities Amid Global Shifts report projected that growth rates are insufficient to address the region's pressing socioeconomic needs, including reducing poverty and inequality. Countries in the region should therefore focus on boosting productivity while reducing socioeconomic inequalities and maintaining macroeconomic stability.
  • But the IDB acknowledges that amid global shifts, the region needs to embrace a series of reforms to seize growth opportunities and chart a course toward greater prosperity for its citizens. These include capitalising on the realignment of global supply chains, reducing labour informality, while efficiently managing fiscal and monetary policy.
  • There are also opportunities to strengthen intraregional integration through trade. Despite shared economic interests, intraregional trade accounts for only 15% of the region's total trade, compared to 55% in Asia and 68% in Europe. The shifting global dynamics have created opportunities for Latin America and the Caribbean to attract trade and investment flows, underscoring the urgency of integrating the region more deeply into global value chains.
  • Foreign direct investment remains critical to increasing productivity, fostering industrial diversification, and driving growth in Latin America and the Caribbean.
  • Furthermore, though growth rates have returned to long-term averages, inflation has largely been contained, and many countries have taken steps toward fiscal consolidation; substantial risks remain, These risks include global trade fragmentation, volatility in financial markets, and uncertainty surrounding the global economy.

(Sources: Trinidad Express Newspaper & IDB)