By: Staff Writer
April 8, 2025
The Inter-American Development Bank (IDB) in their macroeconomic report for 2025 said that notwithstanding Latin American and Caribbean countries are returning to their average growth pattern of 2.4 percent in 2024 there are still yet geopolitical risks that can slow growth in 2025.
The bank, said, “Latin American and Caribbean economies are returning to their average growth path after the pandemic, with 2024 GDP projected to grow 2.4 percent, exceeding initial forecasts of 1.9 percent earlier in the year. Similarly, inflation rates have reverted to pre-pandemic levels. These trends reflect effective economic policy management within the region, as well as the combination of easing global inflationary pressures and normalizing global growth rates.
“Proactive policies have strengthened the macroeconomic position of economies in the region. Central banks acted decisively to raise interest rates, curbing inflation more rapidly than other regions.
“Fiscal authorities also managed to consolidate fiscal balances following the substantial deficits incurred during the pandemic, supporting the decline in sovereign debt spreads. Consequently, labor markets in many countries have demonstrated resilience, with historically low unemployment levels.”
The report added: “Despite progress, significant challenges persist. Inflation remains above target in many countries, with signs of resurgence in some cases. Consequently, central banks are halting or reversing interest rate cuts.
“Fiscal uncertainty continues as many countries encounter difficulties meeting 2024 targets and borrowing costs remain high. External factors—such as geopolitical risks, escalating trade tensions, and uncertainty over global interest rates—further cloud the outlook. Additionally, the growing frequency and intensity of adverse climate-related events are symptoms of increasing long-term risks.
“Projected growth rates remain insufficient to address the region’s pressing socioeconomic needs, as evidenced by the continued rise in poverty rates.
“The global outlook provides limited solace, with growth expected to remain subdued in the coming years amid substantial downside risks, partly driven by rising economic policy uncertainty. In this context, domestic factors are once again taking center stage. Latin American and Caribbean countries must focus on boosting productivity while reducing socioeconomic inequalities and maintaining macroeconomic stability.