Regional Macroeconomic Balance 2025

Sergio Olarte

Macro Reasearch Department

A/ Abstract

• The election of Donald Trump brought a turbulent start for Latin America, with migration policies that pointed to a sharp collapse in remittances, along with the possibility of slowing international trade and US intervention in economies considered to be promoters or producers of drug trafficking. As a result, growth projections and market access expectations began on a pessimistic, even recessionary, note in some countries such as Mexico.
• However, as the outlook became clearer, the region faced shocks that tuned out, in fact, positive. Remittances grew by more than 30%, international trade recovered to its pre-pandemic level, and growth rates exceeded expectations— even in Mexico—while exchange rates and interest rates showed that the region is not only resilient but is also being viewed more favorably by markets.
• During 2025 we saw 12 upgrades across five countries by rating agencies, compared to only six downgrades in just two countries. Exchange rates (where they exist) appreciated an average of 10% against the U.S. dollar over the year; surpassing even the dollar’s global weakness, while interest rates and risk appetite for Latin America not only improved but also helped ease governments’ financial burdens.
• Looking ahead to 2026, although we expect remittances to stabilize (like what occurred under Trump 1.0) we also anticipate that market conditions and a more favorable investment outlook will support the region’s continued resilience. A key factor will be how the new administrations in Bolivia, Ecuador, Honduras, and even Argentina advance structural reforms and initiate (or consolidate) their adjustment processes.
• Nonetheless, the region’s structural challenges will persist. Low productivity, fiscal pressures, and high financial burdens (elevated debt-to-GDP ratios) will remain top concerns. Therefore, the electoral calendar, which will continue to be very active, will be critical for shaping long-term policies regarding the size of the state and foreign direct investment.

Full Analysis of the Regional Macroeconomic Balance 2025 (PDF)