World Bank cautions LAC countries about increasing uncertainties
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Durrant Pate/ Contributor
The World Bank’s Latin America and the Caribbean Economic Review (LACER) is raising the alarm bells to Latin America and the Caribbean (LAC) countries regarding the growing global economic volatility.
LACER is urging LAC to adapt their economic strategies to navigate increasing uncertainties. The report forecasts growth of 2.1 per cent for 2025 and 2.4 per cent in 2026, making it the slowest-growing region worldwide.
Low investment, high debt, and a shifting external environment are major barriers to the region’s development. “The global economic landscape has changed dramatically, marked by higher levels of uncertainty,” explains Carlos Felipe Jaramillo, vice president for Latin America and the Caribbean at the World Bank.
Need to recalibrate strategies
According to him, “countries must recalibrate their strategies and advance bold and practical reforms that boost productivity and competitiveness, while tackling long-standing gaps in infrastructure, education, trade, and governance to ensure job creation and better opportunities for businesses and citizens”.
Despite some progress in controlling inflation, fiscal deficits remain a pressing concern, with the debt-to-GDP ratio expected to reach 63.3 per cent in 2025, up from 59.4 per cent in 2019.
The fast-evolving global economic environment adds further pressure, as persistent inflation in advanced economies may delay interest rate cuts and limit monetary policy options.
Concerns around global trade restrictions create uncertainty around nearshoring and market access, contributing to a more cautious economic and business environment. Slowing growth in China and cuts in overseas development assistance also contribute to LACER’s pessimistic outlook.
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