Latin America and the Caribbean are facing slow economic growth, with the World Bank Group’s latest Latin America and the Caribbean Economic Review projecting growth rates of 2.3 percent in 2025 and 2.5 percent in 2026, which are among the lowest globally. The report, titled "Transformational Entrepreneurship for Jobs and Growth," highlights persistent challenges such as inflation, rising public debt, weak investment, and global uncertainty.
The external environment remains difficult, with falling global demand and commodity prices expected to decline by about 10 percent in 2025 and another 5 percent in 2026. This trend is likely to negatively affect key sectors in the region. Trade policy uncertainty also poses risks to market access and nearshoring opportunities.
Domestically, inflation continues to be a concern, while public debt has increased. The region's debt-to-GDP ratio rose from 59.9 percent in 2019 to 63.8 percent in 2024. Slower monetary easing in advanced economies is keeping borrowing costs high, which makes credit more expensive and reduces investment, job creation, and productivity growth.
Susana Cordeiro Guerra, Vice President for Latin America and the Caribbean at the World Bank, said: “Governments in the region have steered their economies through repeated shocks while preserving stability. Now is the time to continue building on that foundation—accelerating reforms to improve the business climate, invest in enabling infrastructure, and mobilize private capital.”
The report calls for domestic reforms aimed at attracting investment and promoting "transformational" entrepreneurship—firms with high growth potential that can spread technology, create jobs, and improve productivity. William Maloney, Chief Economist for Latin America and the Caribbean at the World Bank, stated: “The entrepreneur is the critical actor in development, identifying opportunities, innovating, and taking the risks needed to create value added and jobs. Creating more dynamic economies in Latin America and the Caribbean will require strengthening our pipeline of entrepreneurial talent, while undertaking the systemic reforms necessary for them to thrive.”
While support for entrepreneurship exists across the region, most businesses are micro or small enterprises with limited potential to grow. These account for up to 70 percent of firms in some countries. A smaller group of "transformational" firms could drive innovation but face obstacles such as limited access to finance, heavy regulation, skills shortages, and weak infrastructure.
To encourage private sector-led growth and job creation, the report recommends three main actions: investing in human capital by improving education quality at all levels; supporting policy reforms that foster a business-friendly environment; and expanding access to finance by addressing credit constraints faced by over a quarter of firms—about twice as many as those facing similar issues in OECD countries.
According to the report’s recommendations, measures like scaling up short-cycle training programs aligned with private sector needs can help build a capable workforce. Reforming taxes to promote investment as well as modernizing bankruptcy laws can improve conditions for entrepreneurs.
The World Bank concludes that with targeted reforms focusing on entrepreneurship development, Latin America and the Caribbean can stimulate innovation, expand economic opportunities, and build more competitive economies.