IMF urges Latin America to cut debt and lift productivity while tailwinds last
SPY•The IMF urged Latin American governments to reduce public debt and raise productivity, warning that favorable financing conditions may not last. It forecasts regional growth of 2.3% in 2026 and 2.5% in 2027, both lower than its July projections.
1. Growth outlook
The IMF’s Regional Economic Outlook projects growth in Latin America and the Caribbean of 2.3% in 2026 and 2.5% in 2027, down 0.1 and 0.2 percentage points, respectively, from July forecasts. Strong U.S. demand, high commodity prices, supportive financial conditions, tourism and remittances are sustaining activity, but the fund said these factors do not resolve high public debt and weak productivity growth.
2. Fiscal challenges
The report said fiscal consolidation measures implemented in 2025 were smaller than planned, and adjustments have stalled in many countries this year. IMF staff estimate that better terms of trade and looser financial conditions add about 0.6 percentage point to 2026 growth in Brazil, Chile, Colombia, Mexico and Peru relative to last year. Inflation is expected to return to target in most countries by the end of 2027, with risks tilted to slower growth and higher inflation.
