Latin America outlook 2026: Growth will soften but be resilient to US tariffs
Growth slows across Latin America, but Mexico and Colombia show resilience amid trade and political headwinds
We anticipate a slowdown in 2026 GDP across most countries in the region. Domestic demand will weaken due to cooling labor markets and uncertainties caused by upcoming elections and the ongoing US trade war weighing on investment.
Only Mexico and Colombia will grow slightly faster next year. Colombia will benefit from a lower drag from net exports and resilient domestic demand, and fiscal consolidation will be delayed until a new government takes power in August 2026. Mexico will gain from a partial recovery of domestic demand and a positive base effect from the sharp slowdown this year.
We expect inflation to continue to fall next year and stabilize within target ranges but still above the point targets.
- Inflation dynamics are more benign in Peru and Chile, in line with historical trends.
- Mexico, Colombia, and Brazil still face high core prices and substantial upside risks.
- Argentina’s inflation will sharply slow but will not be enough to return to single-digit levels.
