Latin America avoids recession as ECLAC projects continued expansion through 2026

Dec 30, 2025 News

– South America expected to lead in 2025, with growth of 2.9%

Latin America is expected to avoid recession and continue expanding through 2026, according to the latest outlook from the United Nations‘ Economic Commission for Latin America and the Caribbean (ECLAC), which projects regional growth of 2.4% in 2025 and 2.3% next year.

While the pace remains moderate, the forecast underscores resilience in the face of a volatile global environment and points to areas where the region is finding stability and opportunity.

“If these projections are confirmed, the region will accumulate four years of low growth, with an average annual rate of 2.3%,” ECLAC said in its Preliminary Balance of the Economies of Latin America and the Caribbean 2025, as Revista Fortuna reports. Still, the organisation noted that steady expansion, easing inflation and improved external balances have helped the region remain on a growth path rather than slip into contraction.

South America is expected to lead in 2025, with growth of 2.9%, supported by recoveries in Argentina, Bolivia and Ecuador after contractions last year, the report reveals. Through a more granular look, Paraguay stands out with projected growth of 5.5%, driven by agro-export activity and macroeconomic stability, while Argentina is forecast to grow 4.3% on a rebound effect following two years of recession. Brazil, the region’s largest economy, is expected to expand 2.5% this year and 2.0% in 2026.

Inflation stands out as one of the region’s more tangible areas of progress. ECLAC estimates that prices across Latin America will close 2025 with average inflation of 2.4%, before edging up to a median of 3.0% in 2026 — levels that remain well below those recorded during the inflationary shocks of 2021 and 2022. The deceleration has been especially evident this year: between February and September, regional inflation averaged 1.8%, supported by lower international food and energy prices, improved global supply conditions and reduced financial volatility.

The region’s external accounts have also shown signs of stabilisation. ECLAC expects the current account deficit to hold near 1.6% of GDP in 2025, a marked improvement from the roughly 2.5% average seen between 2015 and 2019, with a modest further narrowing projected for 2026. Central America has benefited from sustained remittance inflows, while South America has been supported by goods trade surpluses tied to natural resource exports.

At the same time, ECLAC cautioned that growth dynamics remain uneven across countries. Mexico is projected to grow 0.4% in 2025, with activity strengthening to 1.3% in 2026, while Cuba and Haiti are expected to remain in contraction. Employment growth is also set to lose momentum, slowing to 1.5% this year and 1.3% next year, even as job creation continues in areas such as financial services, business services and manufacturing. Looking ahead, the commission argued that the region’s relative macroeconomic stability provides a foundation for stronger performance if accompanied by targeted policy action. ECLAC urged governments to prioritise investment, productive diversification and improvements in education, saying these measures could help translate current stability into more durable and inclusive growth over the medium term. (The Latin Times)

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ECLAC, expansion, Latin America, recession

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