Strong, credible institutions and deeper regional integration are essential to sustain long-term growth, with digital tools boosting tax collection, spending efficiency, and modernized payments, while AI and critical minerals offer opportunities only if governance keeps resource booms in check.

Public debt sits around 59% of GDP, with projections suggesting a debt-to-GDP range of roughly 57% to 66% by 2028 under various scenarios, signaling fiscal strain and policy room for response.

Productivity remains the bottleneck for wage gains even as unemployment nears historic lows and inflation stabilizes, with a slowing working-age population dampening labor-driven growth.

Labor markets improved in 2025, with lower unemployment and rising female participation, but productivity gains are modest as demographic trends curb the working-age pool.

Policy stance should be neutral on monetary policy while keeping flexible tools to absorb external shocks, as inflation is near target but global conditions tighten and non-traditional assets influence policy dynamics.

Policies should boost competition, skills formation, regional integration, and deeper regional value chains to lift productivity and living standards.

Future growth hinges on productivity gains and upgraded skills, including widespread digital training and smoother transitions into higher-productivity occupations, with AI-related skills among the fastest-growing—about 7% of vacancies by mid-2025.

The shift to AI, electrification, and the global energy transition raises demand for minerals like copper, lithium, and rare earths, where the region holds significant reserves, but wealth from minerals requires price stability and diversified processing capacity.

IDB projects Latin America and the Caribbean to grow about 2.1% in 2026 after 2.2% in 2025, reflecting modest growth amid higher global rates and rising debt service costs.

Deepening regional integration and enhancing competition in services—such as banking and logistics—are crucial to unlocking scale, lifting productivity, and capturing value beyond extraction.

Sustained, productivity-led expansion depends on credible public finances and leveraging digitalization, AI, and energy opportunities, especially through critical minerals like lithium, copper, and rare earths.

The overarching takeaway is to maintain fiscal prudence, advance regional integration, strengthen institutions, invest in digitalization and services competition, and convert technological and resource endowments into durable productivity gains.