By: Staff Writer
October 20, 2026
The International Monetary Fund (IMF) said in their Regional Outlook that growth in :atin America and the Caribbean (LAC) has been relatively steady at 2.5 percent in 2025 and projected at 2.3 percent in 2026.
The IMF also said: “Growth across the Western Hemisphere is projected to pick up slightly to 2.3 percent in 2027–28. The improved outlook for 2027 is expected to be broad based, supported by recoveries in Canada and Mexico, stronger activity in parts of South America and Central America, renewed momentum in Venezuela, and Jamaica’s recovery from Hurricane Melissa.”
The regional downgrades come even as the Fund nudged up its world growth forecast for this year to 3.1 percent from July’s 3.0 percent, crediting rerouted energy supplies and AI-driven investment for the resilience of what it calls a split global economy.
The Middle East war has turned energy into a global inflation shock, with Brent crude about 45 percent above its prewar level. Higher fuel and power costs are squeezing households and businesses, while fears of persistent inflation have helped push global borrowing costs to multidecade highs.
In Latin America, the IMF said, the energy shock’s effect depends on whether gains for commodity exporters outweigh losses for energy importers and on how credible central banks’ inflation targets are, adding that “there is little offset from the technology upturn in most countries.”
The IMF also said: “Trade uncertainty is weighing most heavily on the highly integrated economies in North America. Canada faces a particularly challenging outlook from higher tariffs and continued trade policy uncertainty.
“In Mexico, export industries are expected to continue growing. However, uncertainty regarding domestic policies will weigh on corporate investment.
“Elsewhere in LAC, the impact of US tariffs is relatively low, and some are benefiting from a shift in global demand (notably from China) away from US products. At the same time, some countries in the region are expected to face tougher competition from imports of Asian-produced intermediate and consumer goods, potentially weighing on domestic manufacturing output. Solid global tourism demand is expected to continue to support activity in much of the Caribbean in 2027.”
The IMF said risks remain tilted to the downside. It warned that market turmoil could hit emerging economies through higher government borrowing costs, pressure on their currencies and tighter local financial conditions.
“A more prolonged period of high energy prices would add to inflation across the region and weigh on energy- and fertilizer-importing economies through higher production costs, reduced household purchasing power, and adverse effects on agriculture. However, such a scenario would benefit both activity and the fiscal positions for the region’s oil exporters. A higher path for the US policy rate, higher global term premiums, or a decompression of sovereign spreads could raise borrowing costs and reduce capital flows to LAC.”
The IMF added: “Those with significant external financing needs and high debt would be particularly hard hit. A weakening of the global technology cycle could dampen AI-related investment and lead to negative wealth effects through a downward revaluation of global equity and corporate bond prices.”