The United Nations Economic Commission for Latin America and the Caribbean (Cepal) has released its forecast for regional economic growth in 2025. The economic growth rate for the Latin America and Caribbean region is projected to be 2.2% this year, a slight decrease from 2.3% in 2024. Despite this, Cepal stated that the high growth rates of some countries, such as Argentina, Panama, and Paraguay, are driving the overall regional growth.

This announcement marks the second forecast adjustment since President Donald Trump's trade war. Cepal predicts that the region will continue to see modest growth despite these external uncertainties. However, Cepal's warning is clear: "The Latin American and Caribbean region has entered a new phase of economic slowdown in 2025." The regional economy, which showed signs of recovery at the beginning of 2024, lost momentum by the end of the year, and this trend is expected to continue into 2025. The report expressed concern that the average regional economic growth rate over the ten-year period from 2016 to 2025 is only 1.2%, a performance worse than the "lost decade" of the 1980s.

Mixed Fortunes by Country... Argentina, Panama, and Paraguay Show "Surprising" Growth 

The most notable aspect is the stark difference in growth rates among countries. Argentina is expected to lead the region with a high growth rate of 5%. This is attributed to recent economic reforms and a boost in agricultural exports. Panama (4.2%) and Paraguay (4%) follow with high growth rates. These countries are all expected to maintain solid growth, driven by factors such as large-scale infrastructure investments, strengthening their roles as international trade hubs, and increasing agricultural and livestock exports.

In contrast, Mexico (0.3%) is projected to struggle, remaining in the lowest tier of the region. Analysis suggests that Mexico, which is highly economically interdependent with the United States, is being directly affected by recent trade conflicts and sluggish domestic demand. Cuba (-1.5%) and Haiti (-2.3%) are expected to post negative growth due to political instability and economic turmoil, with their economic situations likely to worsen further.

Chronic Problems Hinder Growth 

In analyzing the reasons for the overall regional growth slowdown, Cepal pointed to chronic structural issues. According to the report, "economic performance will continue to be determined by the fragility of internal factors such as weakening external demand, tight financial conditions, slower domestic consumption, low investment, high rates of informal employment, and persistent structural inequality." This suggests that internal problems, which regional countries have long failed to solve, are a major obstacle to economic growth, not just changes in the external environment.

While the overall regional growth rate is expected to rebound slightly to 2.3% in 2026, this is still far below the region's potential growth rate. There is a growing call for fundamental structural reforms to enhance export competitiveness, stimulate domestic demand, and address social inequality if the Latin American economy is to escape the cycle of low growth and achieve sustainable development.