ECLAC cuts Latin America's 2026 growth forecast to 2.0% amid geopolitical tensions

Santiago, Chile — The Economic Commission for Latin America and the Caribbean (ECLAC) projects the region's economy will grow 2.0% in 2026, below the 2.4% estimated for 2025, and 2.5% in 2027, amid high international uncertainty.

The agency attributes the slowdown to geopolitical tensions, disruptions in logistics routes, less predictable trade policy and costlier financing. It also warns that weaker employment momentum, a slight rise in inflation and possible effects of El Niño could condition the recovery.

Employment keeps growing, but at a slower pace, which limits income and consumption and makes it harder to reduce informality and labor gaps. Inflation is trending slightly upward on energy and food prices, hitting hardest the households that spend more of their income on essential goods.

Costlier international financing also weighs: the U.S. Federal Reserve raised rates by 25 basis points in September — its first hike in three years — and the European Central Bank applied two 25-basis-point increases in June and September, raising borrowing costs for governments, businesses and consumers.

By subregion, South America would grow 2.1% in 2026; Central America, 1.7%, weighed down by Cuba and Haiti — excluding them, the average would be 4.1%; and the Caribbean, 7.4%, driven by Guyana — without that country, the rate would be just 1.2%. Faced with this outlook, ECLAC calls for scaling up productive development policies and integrated formalization strategies to create formal, quality jobs.

Photo: UN News

Source: UN News