By: Staff Writer
April 25, 2025
The International Monetary Fund this past Tuesday cut growth forecasts for the Caribbean from 2.5 percent to 2.0 percent.
For central America the estimate is for 3.8 percent output growth this year, slightly slower than the 3.9 percent rate in 2024, while the Caribbean is seen decelerating to 4.2 percent in 2025 from last year’s 12.1 percent.
The IMF also said: “The Latin American and Caribbean (LAC) forecasts are revised downward by 0.5 percentage point for 2025 and 0.3 percentage point in 2026 compared with those in the January 2025 WEO Update. The revisions owe largely to a significant downgrade to growth in Mexico, by 1.7 percentage points for 2025 and 0.6 percentage point for 2026, reflecting weaker-than-expected activity in late 2024 and early 2025 as well as the impact of tariffs imposed by the United States, the associated uncertainty and geopolitical tensions, and a tightening of financing conditions.”
Executive Directors broadly agreed with staff’s assessment of the global economic outlook, risks, and policy priorities. They concurred that the global economy is at a critical juncture, with significant internal and external imbalances and vulnerabilities. Directors recognized that major policy shifts are underway, generating a new wave of uncertainties with potentially significant implications for the functioning of the global economy.
Directors noted that the financial market landscape is marked by increased uncertainty and market volatility, against the backdrop of stretched valuations within many segments of financial markets. Global financial conditions have tightened, with near-term financial stability risks (as gauged by IMF’s Growth-at-Risk metric) rising. Directors concurred that further correction of asset prices (with geopolitical risks being a potential trigger), the ongoing increase in leverage and interconnectedness in the financial system, especially among certain non-bank financial intermediaries (NBFIs) receiving strong investment flows in recent years, alongside still-rising sovereign debt levels, constitute key vulnerabilities keeping risks to financial stability elevated.
Pierre‑Olivier Gourinchas, Director, Research Department, IMF, said: “Finally, this is an environment of enormous uncertainty, increased volatility. And that I think is something that will dominate for many of the emerging markets. So when we are looking at our assessment, we are actually downgrading the emerging market economies for 2025 and 2026, most of them. Some of them may, as I mentioned, benefit. But overall, as a group, they are downgraded. While because they are also very plugged into the global supply chains, the uncertainty is leading to a pause in investment and activity, and they are going to suffer from the decline in demand for their products coming from the tariffs.”