A. M. 
As part of the virtual forum “Citi Economic Outlook 2025”, Ernesto Revilla, Citigroup’s Chief Economist for Latin America, and Esteban Tamayo, Economist, shared a detailed analysis of the economic outlook for the region. They highlighted the economic uncertainty that could mark 2025, driven by factors such as the recent election of Donald Trump as president of the United States and the possible protectionist policies that his administration could implement.
One of the main concerns for Latin America is the impact of Trump’s immigration and trade policies. The expulsion of migrants and the possible increase in tariffs on imports could alter regional economic dynamics, especially in countries such as Mexico, which is highly exposed to U.S. decisions. Likewise, US economic growth, although resilient in the short term, could slow down, indirectly affecting the region.
In terms of economic flows, remittances have been stable since 2020, although with intermittent signs of weakness. This income is crucial for economies such as those of the Northern Triangle (Guatemala, Honduras and El Salvador), where remittances represent up to 27% of GDP. Tourism shows no immediate signs of slowing down, a positive factor for economies dependent on this activity.
Commodity prices have provided moderate relief to regional inflation, although headwinds are expected due to fluctuations in oil and grains. Headline inflation remains under control in most countries, except Costa Rica, and disinflation is expected to continue as the economic slowdown consolidates.
In terms of monetary policy, central banks have initiated interest rate cuts, in line with recent Federal Reserve decisions. Countries such as Costa Rica and the Dominican Republic are leading this strategy, although high inflation in previous years limited fiscal adjustments. Debt issuance has shown mixed results, reflecting the challenges of financing in an environment of higher risks.
The region’s political scenario also plays a key role in economic stability. Presidential elections in Guatemala, El Salvador, the Dominican Republic and Panama set the agenda for 2024, while projects such as the Dominican Republic’s modernization have been put on hold. Panama, meanwhile, is moving forward with fiscal consolidation plans in response to economic challenges.
By 2025, inflation in the region is expected to remain within the targets set by central banks, while interest rates will continue their downward trajectory. This will depend on the Fed’s easing policy, which could provide additional support to local currencies, such as the Dominican peso (DOP) and the Costa Rican colon (CRC).
Although there are opportunities for growth in 2025, the region faces significant challenges related to external policies, dependence on remittances, and vulnerability to changes in commodity prices. The ability of governments to implement prudent fiscal and monetary policies will be crucial to mitigate risks and foster a sustainable recovery.
