World Bank projects 2.2% growth for Latin America and Caribbean in 2026
Key Points(5)
- Latin America and the Caribbean is projected to grow 2.2% in 2026, slightly below the 2.4% recorded in 2025, as high debt, borrowing costs and economic uncertainty continue to weigh on the region, according to a new World Bank report.
- The Latin America and the Caribbean Economic Update , released Oct.
- 6, said the region’s modest average growth masks stronger performances in countries that have pursued fiscal reforms, strengthened institutions and encouraged private investment.
- El Salvador and Paraguay continue to outperform the regional average, supported by improved security conditions, fiscal consolidation and private investment.
- Panama and the Dominican Republic have also sustained strong growth, while Argentina is projected to expand for three consecutive years from 2025 to 2027 — a stretch the report said would be its first in nearly two decades.
Latin America and the Caribbean is projected to grow 2.2% in 2026, slightly below the 2.4% recorded in 2025, as high debt, borrowing costs and economic uncertainty continue to weigh on the region, according to a new World Bank report.
The Latin America and the Caribbean Economic Update, released Oct. 6, said the region’s modest average growth masks stronger performances in countries that have pursued fiscal reforms, strengthened institutions and encouraged private investment.
El Salvador and Paraguay continue to outperform the regional average, supported by improved security conditions, fiscal consolidation and private investment. Panama and the Dominican Republic have also sustained strong growth, while Argentina is projected to expand for three consecutive years from 2025 to 2027 — a stretch the report said would be its first in nearly two decades.
“Latin America and the Caribbean has the potential to achieve stronger and more ambitious growth,” said Susana Cordeiro Guerra, the World Bank’s vice president for the region.
She said countries that maintain sound economic policies, strengthen institutions and advance reforms are demonstrating that stronger growth is possible.
The report warned, however, that several risks could further constrain economic activity. Volatile energy prices could slow the decline in inflation and keep interest rates high, limiting access to credit and investment. Heavy debt and interest payments also restrict governments’ ability to fund public investment.
The report also cautioned that El Niño could disrupt agriculture and hydropower production, pushing up food and energy prices.
AI adoption presents productivity challenge
The World Bank report also examined how artificial intelligence could boost productivity and reshape employment across Latin America and the Caribbean.
A median of 17% of working-age adults across the region reported using generative AI tools, roughly half the rate in the United States and Canada, according to the report.
Businesses are increasingly adopting AI, but relatively few are integrating the technology into their core operations. The main barriers to more productive use are not cost or access, the report said, but limited management expertise, workforce skills and the ability of businesses to reorganize around new tools.
“AI is already here. The question is whether the region can use it productively,” said Carlos Rodriguez-Castelan, the World Bank’s acting chief economist for Latin America and the Caribbean.
He said governments that invest in skills and businesses’ capacity to use AI could see meaningful gains.
About 8% of the region’s workforce holds high-skill, knowledge-intensive jobs in which AI could enhance productivity, while roughly 10% works in routine cognitive occupations whose tasks are more exposed to automation, the report found.
Routine manual jobs could also face greater exposure as automation hardware becomes less expensive. About one-quarter of workers in the region are employed in such occupations, according to the report.
To help countries benefit from AI, the World Bank recommends strengthening business capabilities, expanding short-term and technical training, and modernizing digital government services and data systems.
It also highlighted the potential of low-cost AI applications tailored to local needs, which it described as “small AI.” Such tools could support education, telemedicine and public service delivery while giving small businesses and farmers access to expertise that might otherwise be out of reach.
The report said consistent economic policies and investment in productivity would be key to creating better jobs, raising incomes and putting the region on a stronger growth path.
