Latin America projected to grow 2.2% in 2026, ECLAC says

If forecast holds, five-year growth pace will remain insufficient, ECLAC says

The U.N. Economic Commission for Latin America and the Caribbean projects Latin America and the Caribbean will grow 2.2% in 2026, down from 2.4% in 2025, economist César Addario Soljancic wrote in a United Press International analysis published Sept. 10. If the forecast holds, the region will have averaged roughly 2.3% growth across five consecutive years, a pace ECLAC considers insufficient to produce sustained increases in per capita income or close development gaps.

The World Bank projects similarly subdued regional growth of about 2.2% in 2026 and expects only a slight improvement in 2027, Soljancic wrote.

Soljancic said the deeper constraints are structural: low productivity, persistent labor informality, political uncertainty and a volatile international environment. Weak private consumption compounds the problem, he wrote, while insufficient investment remains one of the principal obstacles to faster growth.

Public debt remains historically elevated in many countries, limiting governments’ ability to stimulate their economies, according to Soljancic. He said monetary authorities must remain cautious about inflation while fiscal policymakers face the difficult task of restraining deficits without further weakening demand.

Much of Latin America has nevertheless made substantial progress toward macroeconomic stability compared with earlier decades, Soljancic wrote. The challenge now, he said, is to convert that stability into higher productivity, greater investment and stronger formal employment.

Trade remains moderately resilient, and foreign direct investment continues to offer possibilities, according to the analysis. Nearshoring has created opportunities for Mexico and parts of Central America as companies seek to relocate portions of their supply chains from Asia closer to North American markets.

Higher shipping costs, geopolitical tensions in Asia and a corporate push to shorten and diversify supply chains have reinforced the nearshoring trend, Soljancic wrote. He said those conditions have given countries near the United States a structural advantage they did not have a decade ago. Cautious announcements of new investment projects, however, suggest that global uncertainty continues to discourage long-term commitments.

The region also faces risks from prolonged geopolitical conflict, which could raise energy costs and tighten access to international financing, Soljancic wrote. Informal employment and weak productivity reinforce one another, he said.

Without greater investment in human capital and technology, growth remains sluggish, making the expansion of quality formal employment more difficult, according to the analysis.

At the same time, Soljancic said, Latin America has opportunities unavailable to previous generations. Lithium, copper and nickel, combined with the region’s renewable-energy potential, give it a strategic role in the global energy transition.

Greater regional integration could amplify those advantages, he wrote. Soljancic also cited productive development policies connecting macroeconomic stability with investment and innovation, including a push toward digital transformation.

Soljancic placed the current outlook within an economic history he described as recurring cycles of boom and bust, with promises of transformation failing to keep pace with regional needs. From the decades following independence to the present, he wrote, the region has moved among commodity dependence, industrialization experiments and market-oriented reforms while struggling with low growth that has limited convergence with advanced economies.

During much of the 20th century, many countries adopted import-substitution industrialization, using high tariffs and interventionist governments to build domestic industries and reduce dependence on manufactured imports. Soljancic wrote that the model produced some diversification and urban employment but also contributed to inefficiency, chronic fiscal deficits and external vulnerabilities that erupted during the debt crisis of the 1980s.

Market reforms commonly associated with the Washington Consensus followed in the 1990s, combining privatization, trade liberalization and greater fiscal discipline. Several countries stabilized their currencies and attracted new capital, Soljancic wrote, but growth remained uneven and inequality remained high.

The commodity supercycle of the 2000s brought strong economic expansion, falling poverty and greater social spending as high prices for oil, copper, soybeans and minerals fueled regional growth. After commodity prices declined after 2014, Soljancic wrote, low productivity, widespread informal labor and insufficient investment to modernize productive structures again became apparent.

The COVID-19 pandemic magnified those vulnerabilities, and the recovery that followed has been incomplete, according to the analysis. Soljancic said that history helps explain why Latin America faces an economic crossroads in 2026, with modest growth projections and structural challenges demanding more ambitious responses.

Soljancic outlined two conditional paths. If Latin American countries encourage formalization, attract substantially greater public and private investment and make intelligent use of strategic natural resources and new opportunities in global value chains, he wrote, growth could eventually rise toward 3% or more. Macroeconomic stability could then become the foundation for more dynamic and inclusive development.

If inertia prevails and political uncertainty and insufficient reform continue to discourage investment, Soljancic said, Latin America risks settling into growth of roughly 2% to 2.5% for years to come. He considers that pace far too little to transform living standards or substantially narrow the gap with more advanced economies.

Soljancic said the outcome is not predetermined and that choices made in 2026 will help determine whether the region seizes its opportunities or loses another one.

Soljancic identified himself as an economist specializing in public finance with decades of experience advising governments and institutions across Latin America and the Caribbean. He said he has led 69 capital-market issuances across 13 countries totaling nearly $49 billion. UPI noted that the views in the analysis were solely those of the author.