Growth in Latin America & the Caribbean is expected to remain steady from 2.4% in 2025 with a slight decrease to 2.3% in 2026, according to the latest IMF Regional Economic Outlook Western Hemisphere published last Friday. An upward revision of 0.4% for 2025 & -0.1% for 2026 compared to the previous one (April 2025).
Despite uncertainty, the overall global environment has remained generally favourable. According to the report, the region’s limited trade exposure to the U.S. (ex. Mexico) and comparatively low regional tariffs have supported growth. In addition, stable commodity prices, a weaker U.S. dollar, export growth, and resilient labor markets have provided a positive effect.
Upward Revision Driven By Mexico
The upward revision is driven by Mexico 🇲🇽, now expected to expand 1% in 2025, 1.3% higher than forecasted in the April 2025 Regional Outlook, when -0.3% was projected. The IMF forecasts 1.5.% growth for 2026 (+0.1%).
Brazil 🇧🇷 is expected to have growth rates of 2.4% in 2025 & 1.9% in 2026, down from 3.4% in 2024 but an upward revision of 0.4% for 2025 and -0.1% for 2026 of the previous IMF Regional Economic Outlook (April 2025).
Colombia’s 🇨🇴 growth is expected to rise from 1.6% in 2024 to 2.5% in 2025 & 2.3% in 2026.
Top LATAM Growth Countries; Panama 3rd with 4% 📈
According to the new data, the 2025 Top 3 growth countries in Latin America are forecasted to be Argentina 🇦🇷 (4.5% in 2025 and 4% in 2026), Paraguay 🇵🇾 (4.4% in 2025; 3.7% in 2026) and #Panama 🇵🇦 (4% in both 2025 and 2026). View the Top 10 in the chart below. With 4% expected growth, Panama maintains its 3rd position compared to the previous IMF forecast for Panama, with the same growth figures (April 2025).
Inflation
Inflation across Latin America and the Caribbean (excl. Argentina and Venezuela) is projected to remain stable at 4.3% in 2025, before easing to 3.5% in 2026. While Paraguay, Peru, and Uruguay are expected to stay within their central bank targets, inflation in Brazil, Chile, Colombia, and Mexico will likely remain above target for now, moving gradually toward convergence over time.
Panama’s very low inflation in 2024 (-0.2%), is expected to pick up to 0.7% this year and 2% in 2026, the second lowest percentage in Latin America.
Government Debt
Overal Government Debt in the region is increasing from 69.8 to 72.6% of GDP in 2025. Panama’s debt is forecasted to rise from 57.4 to almost 60% of GDP (59.6%) ranking somewhere in the middle of Latin American countries.
The forecast for this year and next is still 0.5 percentage point lower than forecasted in the October 2024 IMF Regional Economic Outlook reflecting changes in trade policy changes and uncertainty.
