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The World Bank (WB) improved Argentina’s growth forecast for 2025 to 5.5%, a 0.5 increase compared to its previous 5% projection from January. The estimate is the same the International Monetary Fund (IMF) gave for the country in its updated World Economic Outlook report published on Tuesday.
The Argentine economy had shrunk by 1.8% in 2024, following two sharp devaluations in late 2023 and a series of austerity measures implemented by President Javier Milei’s government during his first year in office.
The WB, however, downgraded its growth estimates for Latin America and the Caribbean to 2.1%, down 0.4 compared to its beginning-of-the-year projection. It pointed to the challenges regional economies must adapt to in order to navigate growing global uncertainty as part of its reasoning.
The bank also cited the trimming of interest rates by developed countries, concern over global commercial restrictions, China’s growth deceleration, and cutbacks to foreign aid as other contributing factors to its decision.
Brazil’s 2025 growth forecast was also downgraded from the WB’s 2.2% January projection to 1.8%, as well as Mexico, which went from 1.5% to zero. The IMF predicted earlier this week that the Mexican economy would contract 0.3% this year, warning that U.S.-imposed tariffs and the rise in commercial tensions would slow global economic growth even more.
“The global economic scene has changed dramatically, marked by high levels of uncertainty,” read a statement released by Carlos Felipe Jaramillo, World Bank Vice President for Latin America and the Caribbean.
“Countries have to recalibrate their strategies and push for practical and bold reforms.”
The bank’s 2.1% growth projection for Latin America and the Caribbean is the lowest for any region for 2025.
In the midst of a need for investments, public spending continues to be a concern. The World Bank estimates that the debt-regional product ratio rose from 59.4% in 2019 to 63.3% last year.
“Access to technology and use of economies of scale show that commerce and direct foreign investment continue to be essential to speed up growth in Latin America and the Caribbean,” said William Maloney, World Bank chief economist for the region.
Maloney added that a broader list of commercial destinations and more service exports, as well as a delocalization of resources, offer opportunities for the region and “require raising productivity as well as agility.”
Originally published in Ámbito
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