World Bank forecasts 2.2% growth for Latin America and the Caribbean in 2026

WASHINGTON, United States. Latin America and the Caribbean is projected to grow by 2.2 per cent in 2026, broadly in line with the 2.4 per cent recorded in 2025, the World Bank said on Tuesday, October 6.

Its Latin America and the Caribbean Economic Update said that although average growth remains modest, diverging country paths show stronger performance is possible.

"Several countries making sound and durable policy choices are delivering stronger results, including faster growth consistently above 3 to 4%, more investment, and greater market confidence," the report said.

It said El Salvador and Paraguay continue to outperform, while Panama and the Dominican Republic have sustained strong growth on "durable policy foundations". Argentina is projected to expand for three consecutive years from 2025 to 2027, the first time in nearly two decades.

Susana Cordeiro Guerra, World Bank vice-president for Latin America and the Caribbean, said: "The region has significant talent and resources. The priority now is to build on these strengths through consistent policies and investment."

Downside risks

The bank said risks were tilted to the downside. "Energy price volatility could stall disinflation and keep central banks cautious, prolonging the high real interest rates that constrain credit and investment," it said. High debt and interest burdens continue to limit fiscal space.

"El Niño could further disrupt agriculture and hydropower and push up food and energy prices," the report warned.

Artificial intelligence

The update examines how AI could raise productivity. It found a median of 17 per cent of working-age adults across the region use generative AI tools, roughly half the rate in the US and Canada. The main barriers are managerial know-how, workforce skills and firms' capacity to reorganise, rather than cost or access.

"AI is already here. The question is whether the region can use it productively," said Carlos Rodriguez-Castelan, the bank's acting chief economist for the region.

The report estimates that about 8 per cent of the workforce holds high-skill jobs that could be enhanced by AI, while around 10 per cent work in routine cognitive jobs more exposed to automation. About a quarter hold routine manual jobs that may be exposed as automation hardware becomes cheaper.

It highlights the potential of "small AI", low-cost applications adapted to local needs, for small businesses, farmers and public services.