Growth in Latin America and the Caribbean has remained steady despite global uncertainty, according to remarks delivered at the International Monetary Fund’s (IMF) Western Hemisphere Department press briefing on October 17, 2025. The IMF’s Regional Economic Outlook projects growth for the region at 2.4 percent in 2025, with a slight moderation expected next year. However, risks to this outlook are considered to be on the downside.
Labor markets have been described as robust, which has generally supported private consumption across most economies in the region. Many countries have also benefited from low trade exposure to the United States and lower tariffs compared with other emerging economies, providing some resilience against external shocks.
The report notes that macroeconomic policy remains challenging for several countries. While fiscal positions are expected to strengthen in most cases, structural primary balances are projected to be lower than previously anticipated. This suggests delays in fiscal consolidation efforts. Rising public debt ratios highlight the increasing importance of fiscal consolidation to mitigate risks associated with higher risk premiums. Insufficient fiscal effort is seen as complicating both debt sustainability and monetary policy effectiveness.
On monetary policy, inflation continues to exceed targets in some countries despite balanced risks overall. Strong labor markets and ongoing fiscal concerns are slowing progress toward disinflation, although recent currency appreciation has provided some relief in certain cases. Central banks have responded by remaining data-driven, with inflation expectations stable but still above target levels. The IMF recommends continued caution where economic slack is not evident and inflation remains high.
The region’s potential growth continues to lag behind peers due to slow labor force expansion, limited capital accumulation, and stagnant productivity. The IMF’s latest report includes two analytical studies addressing these challenges: one examines how high public debt can limit monetary policy effectiveness and underscores the need for fiscal reforms; another investigates low total factor productivity using firm-level data and identifies barriers such as size-based regulations, financial constraints, and limited competition that hinder more productive firms from expanding.
The IMF maintains active engagement with Latin America and the Caribbean through policy advice, capacity development initiatives, and financial support programs. Since April 2025, Barbados completed its arrangement under both the Extended Fund Facility and Resilience and Sustainability Facility; Costa Rica launched a new Flexible Credit Line (FCL), while Colombia canceled its FCL.
Summing up the situation facing regional policymakers, it was stated: "The global landscape is shifting, but this is no reason for inaction. As the saying goes, countries may not control the winds, but they can adjust their sails. Reinforcing policy frameworks, rebuilding fiscal buffers, and fostering growth opportunities are the sails to adjust."
It was also announced that leadership of the Western Hemisphere Department will transition at the end of October 2025: "Before returning to Julie, let me also remind you that I will be leaving the Western Hemisphere Department by the end of this month, moving to the Fiscal Affairs Department. WHD new director will be Nigel Chalk – sitting here – who already supervises several countries and activities and guarantees a seamless transition."