The World Bank says Latin America and the Caribbean (LAC) can break out of its prolonged low-growth cycle by tapping into the power of entrepreneurship to create jobs, boost productivity, and accelerate innovation.
In its latest publication, Latin America and the Caribbean Economic Review: Transformational Entrepreneurship for Jobs and Growth, the financial institution projects regional growth of 2.3 percent in 2025 and 2.5 percent in 2026—making it the slowest-growing region globally amid stubborn inflation, high debt, weak investment, and ongoing global uncertainty.
“Governments in the region have steered their economies through repeated shocks while preserving stability,” said Susana Cordeiro Guerra, the World Bank’s vice president for Latin America and the Caribbean. “Now is the time to continue building on that foundation—accelerating reforms to improve the business climate, invest in enabling infrastructure, and mobilize private capital.”
The report highlights multiple headwinds, including falling global demand, declining commodity prices—projected to drop by 10 percent in 2025 and another five percent in 2026—and trade policy uncertainty that threatens market access and nearshoring opportunities.
Domestically, inflation remains persistent and debt levels are rising, with the debt-to-GDP ratio increasing to 63.8 percent in 2024, up from 59.9 percent in 2019. Slower monetary easing in advanced economies has also kept debt servicing costs high, making credit expensive and further hindering investment and productivity growth.
William Maloney, the World Bank’s chief economist for Latin America and the Caribbean, underscored the role of entrepreneurs as key drivers of development. “The entrepreneur is the critical actor in development—identifying opportunities, innovating, and taking the risks needed to create value and jobs,” he said. “Creating more dynamic economies will require strengthening our pipeline of entrepreneurial talent while undertaking systemic reforms to help them thrive.”
The report notes that while support for entrepreneurship in the region is strong, most businesses are micro or small enterprises that struggle to grow. These firms account for up to 70 percent of enterprises in some countries but face persistent challenges such as limited financing, burdensome regulations, skills shortages, and weak infrastructure.
To stimulate private-sector-led growth, the World Bank outlines a three-point reform agenda:
- Invest in human capital – Improve education quality, expand managerial training, align workforce programs with private sector needs, and modernize labor regulations.
- Enhance the business environment – Remove distortionary subsidies, reform tax systems, and strengthen logistics, energy, and digital infrastructure to lower entry barriers.
- Expand access to finance – Address credit constraints by strengthening risk-sharing mechanisms, improving dispute resolution, and updating bankruptcy laws to better protect both creditors and entrepreneurs.
With these reforms, the World Bank says, Latin America and the Caribbean can unlock transformational entrepreneurship—fueling innovation, expanding opportunities, and building more competitive and resilient economies.
