Latin America: Key themes to watch in 2025

Here is how we see our key themes for 2025 shaping Latin America’s operational and investment environment.

Economic angst

Latin America’s aggregate growth will slightly accelerate in 2025 but this overshadows slower growth across most countries. We project that only five out of the 43 economies in the region will record growth rates that are half a percentage point higher than those achieved in 2024.

The slowdown across the region will be driven by lower private and government consumption. Labor markets will likely remain tight — limiting the potential for employment growth — and we expect credit expansion to decelerate. Downside risks will be compounded by an adverse external environment. The potential application of tariffs by the incoming US administration would negatively impact trade and weaken many of the region’s currencies, while forced repatriation of illegal workers in the US implies a reduction of remittance flows.

Inflation across the region is forecast to decline. We expect lower price pressures based on Market Intelligence’s global assumption that prices for agriculture-related commodities and oil prices will fall in 2025. Argentine President Javier Milei’s successful implementation of a stabilization program will bring one of the most impactful results in 2025. Venezuela, Cuba and Bolivia will continue struggling to contain prices in 2025.

Most Latin American governments will strive to uphold or progress toward fiscal sustainability in 2025.  We see limited room and political willingness across most of the region to return to the aggressively expansionary spending policies of past decades. Our aggregate figures project the region’s fiscal deficit as a share of GDP decreasing in 2025 from 2024, reflecting reduced debt-service costs as policy rates decline. Brazil, Colombia, Mexico, Bolivia and Costa Rica face significant deficits exceeding 5% of GDP.

Domestic discontent

Policymaking will be slowed and diluted due to most governments in the region needing to secure alliances in either opposition-controlled or highly fractured legislatures to pass legislation. 

Widespread urban protests targeting commercial assets for arson and vandalism have decreased across the region compared with 2019–21. This decline is largely due to a combination of factors that include the coming into power of new governments, the opening of dialogue channels involving the government, protests groups and nongovernmental organizations, and — in cases such as Venezuela and Nicaragua — the states’ use of heavy force and arrest of political opponents and grassroots leaders.

We maintain our protest risk scores across the region at a high level due to the continued prevalence of major drivers of unrest. These include pressures on purchasing power, social inequality, political polarization, environmentally related opposition to extractive industry projects, and distrust in local law enforcement. Latin American pressure groups remain able and willing to generate operational disruption, including blockades of key roads and at extractive industry projects.

Elusive alliances

The Brazilian, Chilean and Peruvian governments will seek friendly relations with the US but without curtailing their relationships with China, their main trading partner. Brazilian President Lula, as chair of the BRICS bloc and host of the UN climate meeting COP30, will continue to call for multipolarity, reform of multilateral bodies, and increased financing to alleviate poverty and tackle climate change. Precedents suggest such initiatives will have limited success. 

Governments across the region — except for Nicaragua, Cuba and Bolivia — will probably continue to isolate Venezuela, without achieving negotiated regime change. Most countries are also likely to reject stronger sanctions against Cuba and Venezuela, as this would risk Venezuelan migration into South and Central America.v

Trade troubles

In response to US President Donald Trump’s proposals on tariffs and deportations, Mexico and most countries in Central America are likely to align with the requests from the new US administration. To prevent trade disruption — over 83% of Mexican exports are sold to the US — Mexican President Claudia Sheinbaum is likely to enhance her predecessor’s migration containment strategy and meet US demands to increase seizures of fentanyl and chemical precursors.

In preparation for the review of the United States-Mexico-Canada Agreement (USMCA) trade agreement in 2026, Sheinbaum is also likely to concede to reduce Chinese exports into Mexico. Argentine President Milei has expressed his intention to pursue a free trade agreement with the US. Milei will likely maintain Argentina’s trade relations with China, although he is likely to limit future Chinese investment.

Click here for our global report on 2025 themes