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The World Bank has reduced its 2025 economic growth forecast for Latin America and the Caribbean to 2.1% from its January forecast of 2.5%, citing factors such as delayed interest rate cuts in developed economies, global trade restrictions, slowing growth in China, and cuts in overseas development assistance.
The forecasts for 2025 growth in Brazil and Mexico were also down from the World Bank’s January updates. Mexico’s economy is projected to have no growth this year, while Brazil’s growth outlook was cut to 1.8% from 2.2%.
Argentina, which secured a $20 billion deal with the International Monetary Fund, is projected to have economic growth of 5.5% this year, up from a previous forecast of 5.0%.
The IMF forecasted a 0.3% contraction in Mexico’s economy this year, warning that the impact of U.S. tariffs and rising trade tensions would further slow global economic growth.
The World Bank estimates that the region’s 2.1% estimated growth this year would make it the slowest-growing region globally.
Government spending remains a concern, with the regional debt-to-output ratio rising to 63.3% last year from 59.4% in 2019.
William Maloney, the World Bank’s chief economist for Latin America and the Caribbean, emphasized the importance of trade and foreign direct investment for accelerating growth in the region.
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