Sound policy choices are driving faster growth in several countries; AI could improve productivity, if firms use it well.
WASHINGTON, October 6, 2026—Latin America and the Caribbean is projected to grow 2.2% in 2026, broadly in line with the rate of 2.4% recorded in 2025, according to the World Bank Group’s Latin America and the Caribbean Economic Update. Although average regional growth remains modest, diverging country paths show that a 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.
El Salvador and Paraguay continue to outperform the regional average, supported by improved security conditions, fiscal consolidation, and robust private investment. Panama and the Dominican Republic have sustained strong growth on similarly durable policy foundations. Argentina is on a similar trajectory, projected to expand for three consecutive years from 2025 to 2027, the first time in nearly two decades, driven by fiscal adjustment, tax reforms, and a more open economy.
The risks to the region are 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. High debt and interest burdens continue to limit fiscal space and crowd out public investment. El Niño could further disrupt agriculture and hydropower and push up food and energy prices.
The report examines how artificial intelligence could raise productivity while reshaping work across the region. Firms are already adopting AI broadly, though rarely in ways that reach their core business processes. Among the wider population, a median of 17% of working-age adults across the region report using GenAI tolls, roughly half the rate in the US and Canada. In both cases, the main barriers to productive use are not cost or access, but managerial know-how, workforce skills, and firms’ capacity to reorganize around new tools.
READ MORE: https://www.worldbank.org/en/news/press-release/2026/10/06/latin-america-caribbean-economic-update
