A. M. 
Latin America and the Caribbean are projected to register an estimated economic growth of 2.1% in 2026, in line with their long-term historical average, according to the Inter-American Development Bank’s (IDB) latest macroeconomic report. The projection reflects a slight slowdown compared to the 2.2% achieved in 2025, in a global context marked by increasing risks and financial uncertainty.
The report, titled “Resilience and Growth Prospects in a Changing Global Economy”, highlights that the region has shown the capacity to adapt to external shocks thanks to fiscal and monetary frameworks that have helped contain inflation and preserve macroeconomic stability.
Moderate Growth, but with structural challenges
Although the 2.1% growth confirms stability, the IDB warns that it remains insufficient to close income gaps and reduce inequalities. In addition, the region faces high levels of public debt and rising interest payments, putting pressure on both public finances and external accounts.
The median sovereign spread fell to 209 basis points at the end of 2025, an improvement from the 268 basis points recorded in 2019, reflecting greater investor confidence and historically low borrowing costs.
However, the average regional public debt stands at 59% of GDP, above pre-2020 levels. Projections indicate that it could range between 57% and 66% of GDP by 2028, depending on economic conditions.
Labor markets and productivity
The projected growth for 2026 is supported by improvements observed in labor markets during 2025. Unemployment rates declined in most countries and approached their lowest levels in recent years.
Female labor force participation also increased significantly. However, the IDB notes that potential growth is limited by modest productivity gains and demographic changes that are slowing the pace of expansion of the working-age population.
In this scenario, sustaining growth will increasingly depend on improvements in productivity and skills development. The report underscores the importance of expanding access to digital training and facilitating the transition to higher value-added jobs.
Artificial intelligence is emerging as the fastest-growing digital skill in the region. By mid-2025, job postings mentioning AI represented 7% of all vacancies, reflecting an accelerated transformation of the labor market.
Strategic opportunity in critical minerals
The IDB identifies a key opportunity in the exploitation and development of critical minerals, essential for the energy transition and technological advancements.
The region holds:
• Nearly half of the world’s lithium resources.
• Approximately 35% of global copper reserves.
• More than 20% of rare earth reserves.
Global demand for lithium could increase between 470% and 800% by 2050, positioning Latin America and the Caribbean as a strategic supplier in the value chains of the future.
However, the organization warns that natural wealth alone does not guarantee sustainable development. To transform this potential into lasting growth, strong institutions, clear rules, robust environmental governance, clean energy, and disciplined fiscal frameworks are required.
Fiscal and monetary policy in a demanding environment
On the fiscal front, the IDB notes that consolidation has weakened and that it is urgent to strengthen the foundations of public finances. The increase in interest payments limits the space for social and productive investment.
Among the available tools, the report highlights digitalization as a mechanism with the potential to improve tax collection, provided it is accompanied by credible compliance strategies.
Regarding monetary policy, while inflation has largely returned to its targets in much of the region, the international environment remains complex due to high global interest rates, changes in financial expectations, and increased use of digital assets and foreign currencies.
The IDB emphasizes the need to move toward a neutral monetary stance (one that neither stimulates nor restricts economic activity) and to develop flexible instruments to absorb external shocks.
Keys to accelerating growth
The report concludes that to overcome the moderate growth projected for 2026, it will be necessary to promote ambitious structural reforms focused on:
• Greater economic competition.
• Improved skills development.
• Deeper regional integration.
• Development of more sophisticated value chains.
The IDB maintains that the combination of macroeconomic stability, fiscal discipline, digital transformation, and strategic use of natural resources will be crucial for raising living standards and building more resilient and inclusive economies in the region.
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