By: Staff Writer
October 9, 2026
The World Bank Group said in its October Latin America & the Caribbean Economic Update that the rapid diffusion of Artificial Intelligence (AI) can become a potential catalyst for productivity and growth.
The bank also said however that a critical distinction must be drawn: Digital access does not guarantee productive use, and algorithms do not automatically generate aggregate productivity.
“Artificial intelligence holds real promise for development in the region, much of it through what the World Development Report 2026 calls “small AI”: low-cost, practical applications, small in model size or narrow in scope, that solve specific problems in low-resource settings and can reach millions through basic phones,” the report said.
The bank also said that Latin America and the Caribbean is projected to grow 2.2% in 2026, broadly in line with the rate of 2.4% recorded in 2025, although average regional growth remains modest, diverging country paths show that a stronger performance is possible.
El Salvador and Paraguay continue to outperform the regional average, supported by improved security conditions, fiscal consolidation, and robust private investment.
Panama and the Dominican Republic have sustained strong growth on similarly durable policy foundations. Argentina is on a similar trajectory, projected to expand for three consecutive years from 2025 to 2027, the first time in nearly two decades, driven by fiscal adjustment, tax reforms, and a more open economy.
The report also said: “In the Caribbean, a dual-track reality persists: Guyana and Suriname’s oil-driven expansions contrast with the maturing, more tempered post-pandemic recovery of tourism-dependent island economies facing high energy and transportation costs.
“Meanwhile, LAC’s largest economies, Brazil and Mexico are growing at or below the regional average, constrained by tight monetary conditions needed to continue disinflation, policy uncertainty, and fading public investment impulses.”
The risks to the region are tilted to the downside. Energy price volatility could stall disinflation and keep central banks cautious, prolonging the high real interest rates that constrain credit and investment.
High debt and interest burdens continue to limit fiscal space and crowd out public investment. El Niño could further disrupt agriculture and hydropower and push up food and energy prices.