Latin America projected to grow 2.4% in 2026 amid commodity volatility

Argentina, Bolivia, Chile hold about 55% of known lithium reserves, USGS says

An analysis published Thursday in UPI’s Voices section reported that the International Monetary Fund projected Latin America’s 2026 growth at 2.4% in its July update, a figure the article’s author said underscores a deeper problem: Latin America remains caught in what the Economic Commission for Latin America and the Caribbean calls a trap of low growth capacity. César Addario Soljancic, a public-finance economist who has advised governments and institutions across Latin America and the Caribbean and led capital-market issuances totaling nearly $49 billion across 13 countries, drew on data from the IMF and ECLAC to argue that renewed volatility in energy and commodity markets is exposing divisions between exporters and import-dependent economies in the region. The piece notes that the views expressed are Soljancic’s own.

The IMF projection was reported alongside debt data from ECLAC, which reported that average public debt in the region reached 52.3% of gross domestic product in 2025, up from 51.9% the year before, Soljancic wrote. That burden limits governments’ ability to respond to new shocks or to finance development, he argued. Macroeconomic stability remains indispensable, he wrote, but it is a foundation, not a complete growth strategy.

The region also holds a disproportionate share of the raw materials the energy transition depends on. Argentina, Bolivia and Chile hold roughly 55% of the world’s known lithium reserves, according to the U.S. Geological Survey, Soljancic wrote, and Chile alone accounts for about a quarter of global copper supply. Mexico, he reported, is well-positioned to benefit from supply chains moving closer to the United States, given its industrial base and preferential access under the USMCA trade pact. Brazil also has advantages in renewable energy and advanced manufacturing, according to the analysis.

Soljancic framed Latin America’s situation as a recurring trap of low growth capacity. The commodity supercycle that supported much of the region’s expansion early in the century began to weaken around 2014 as China’s growth slowed, he wrote. Prices for oil, metals and agricultural exports fell. Government revenue declined in countries that had treated the boom as a lasting source of prosperity, he argued.

Soljancic cited Brazil, Argentina and Venezuela as useful lessons and warnings about how commodity downturns expose postponed reforms. Brazil, the region’s largest economy, was hit hard by the fall in commodity prices, according to the analysis. Soljancic wrote that the external shock alone does not explain the depth of Brazil’s recession. The government’s “New Economic Matrix,” he wrote, relied heavily on fiscal stimulus and subsidized credit, while price controls concealed inflationary pressure for a time. As revenue weakened, the fiscal deficit widened and public debt rose, forcing the central bank to raise interest rates sharply, the analysis said. The contradiction between fiscal stimulus and monetary restraint deepened the downturn, already aggravated by political turmoil and the Petrobras corruption scandal, Soljancic wrote. Measures adopted after 2016 helped restore a degree of fiscal credibility and stabilize expectations, he reported, but Brazil’s subsequent performance showed that adjustment alone does not produce vigorous development. Stable public finances translated into growth only alongside productive investment and rules that businesses could trust, he wrote.

Argentina entered the downturn with high inflation and strict foreign-exchange controls, Soljancic reported. Its reserves were under pressure, and a sharp 2014 devaluation and the dispute with holdout creditors further restricted access to international capital, he wrote. A late-2015 policy shift sought to lift currency controls and settle the debt dispute, improving access to financing, but the transition was poorly sequenced, he argued. Rapid liberalization proceeded without a durable fiscal anchor, leaving the economy vulnerable when investor confidence weakened, according to the analysis. Argentina’s experience shows that coherent reform is not enough on its own; it also requires enough political durability to take effect, Soljancic wrote.

Venezuela, Soljancic wrote, offers a more extreme case. Its dependence on oil left it exposed when prices fell, although serious damage had already been done by expropriations and price controls that weakened production and deteriorated public institutions, he wrote. Rather than adapt to lower revenue, the government financed growing deficits through monetary expansion and imposed tighter controls, producing hyperinflation, economic collapse and mass migration, he wrote.

Other commodity exporters endured the same downturn with far less destruction, according to the analysis. Chile and Peru benefited from more credible monetary institutions, Soljancic wrote, while Colombia and Uruguay also maintained greater continuity in economic management. Their experiences do not prove that sound macroeconomic policy prevents hardship, but they show that it can keep an external shock from becoming a systemic collapse, he wrote.

Latin America also needs institutions capable of carrying out reforms across electoral cycles, Soljancic wrote, and the distinction that matters is whether public investment improves infrastructure and human capital or merely enlarges current spending. Adjustments that ignore social consequences can lose legitimacy before they deliver results, while spending without discipline eventually destroys the resources needed to protect vulnerable citizens, he argued.

Soljancic wrote that natural resources do not automatically create prosperity, and that the distinction between a new opportunity and another short-lived boom will depend on how governments respond. Investment requires predictable rules, and revenue from minerals or energy makes the clearest difference when it strengthens education and infrastructure and helps countries build reserves for the next downturn, he wrote. Countries that treat a windfall as temporary can use it to raise long-term productive capacity; those who spend it as though it will last are likely to return to the same growth trap, he concluded.